Why in the News?

• Disruptions linked to West Asia have exposed vulnerabilities in India's energy security, prompting the government to consider a decade-long strategic fuel programme to significantly expand crude, LNG and LPG storage.

What’s in Today’s Article?

• India’s Strategic Reserve (Core Vulnerability, Present Condition, Difference Between Capacity & Inventory, Shipping & Pipelines, etc.)

The Core Vulnerability

• India can import large quantities of crude oil, LNG and LPG. What differs sharply by fuel is its ability to store, transport and release these fuels during a prolonged disruption.
• India already operates underground strategic crude-oil storage and two underground LPG caverns. It has no operating underground natural-gas storage facility at all.
• Against this background, the government is considering a programme that would add roughly 28 MT of crude-oil storage, 9 MT of LNG storage and 4 MT of LPG storage over a decade.
• The reserves are intended to provide nearly two months of crude and LNG demand and about six weeks of LPG demand.

India’s Present Condition

• Crude Oil
  • Crude is the most mature component. Phase-I of the Strategic Petroleum Reserve provides 5.33 MT of underground capacity across Visakhapatnam, Mangaluru and Padur, with actual storage of about 3.37 MT, roughly 63-64% utilisation.
  • A further 6.5 MT has been approved under Phase-II at Chandikhol and Padur.
• LPG
  • The underground footprint here is far smaller. The Visakhapatnam and Mangaluru caverns together provide about 0.14 MT of capacity.
  • A proposed 4 MT strategic reserve would represent roughly a 30-fold increase in underground LPG capacity.
• Natural Gas
  • This is the largest gap. India has no operational underground gas-storage facility. Its gas-security system instead depends on domestic production, LNG imports, import terminals, commercial inventories and pipelines.

Capacity Is Not the Same as Inventory

• An important distinction runs through this debate. A facility has a physical capacity, but the fuel it actually holds can vary. Not all inventory is immediately accessible either.
• During a crisis, the critical measure is therefore not simply how many tonnes can be stored, but how much fuel is available and at what withdrawal rate it can reach consumers.
• LNG is particularly prone to confusion because India already has substantial import and regasification infrastructure.
• A regasification terminal can receive LNG and convert it into natural gas, but its regasification capacity does not constitute strategic inventory.
• LNG is stored as a cryogenic liquid at around -162°C, requiring specialised insulated tanks and boil-off gas management. Underground gas storage works differently: LNG is first regasified, and the resulting natural gas is injected into a depleted reservoir or cavern.

Building Underground Storage Is Not Simple

• India could eventually combine surface LNG tanks with underground natural-gas storage.
• A separate Petroleum Ministry proposal would require LNG import terminals to maintain storage capacity 10% above normal operating needs, with the surplus available to the government during supply or price disruptions.
• For longer-duration needs, depleted oil and gas reservoirs, 74% of global working gas volume, could offer much larger storage. Salt caverns, by contrast, allow faster injection/withdrawal and more frequent cycling.
• However, a depleted field isn't automatically storage-ready: reservoir characteristics, cap-rock integrity, pressure behaviour, existing wells, cushion-gas needs and pipeline connectivity must all be assessed.
• India's sedimentary basins (Krishna, Godavari, Cambay, Mumbai Offshore, Rajasthan) show potential, but converting geological promise into usable storage requires subsurface study, engineering, construction, testing, filling and pipeline integration.
• Salt caverns face similar scrutiny, Rajasthan's salt formations have been studied, but suitability hinges on depth, thickness, purity, geometry, groundwater and mechanical properties.

Storage as an Infrastructure System

• The US Strategic Petroleum Reserve shows the scale salt caverns can reach: 714 million barrels of authorised capacity across 60 caverns, functioning as an integrated network of caverns, pipelines, marine terminals and refineries.
• Storage is thus fundamentally an infrastructure system, not just underground space.
• LPG illustrates the scaling challenge: a proposed 4 MT reserve would need extensive new caverns plus import terminals, pipelines, pumping systems and bottling infrastructure.
• The Mangaluru cavern highlights the complexity, geological and hydrogeological investigation, rock-mechanics analysis, and groundwater management alongside active surface facilities.

Shipping and Pipelines

• Since energy security relies heavily on maritime logistics, including vulnerable chokepoints like the Strait of Hormuz, India is diversifying both import sources and shipping capacity.
• State-run refiners and the Shipping Corporation of India plan to invest $1.5-2 billion in a joint venture for 59 ships, cutting reliance on foreign vessels.
• Pipelines link storage to inland consumers. PNGRB has authorised about 1,800 km of new LPG pipelines across six states (~$0.7 billion investment), improving deliverability and cutting road dependence, but not adding strategic storage itself.
• This principle spans fuels: underground storage only helps if it can inject/withdraw from the gas grid at the needed rate; LNG tanks need regasification and downstream pipelines; LPG caverns need bottling and distribution links.

The Financing Question

• The reported $42 billion programme, unconfirmed by government, combines infrastructure capex with the cost of buying and maintaining strategic inventories.
• Over half may go to storage infrastructure, the rest to purchasing and filling reserves. The government has denied reports of a funding cess.
• The financial commitment continues beyond construction: billions in fuel must be purchased, financed and maintained, and crisis-released stocks would need replenishing, potentially at higher commodity and freight prices.
• Policy must therefore define who owns and finances the inventory, minimum stock obligations, emergency-release authority, and who bears replenishment and price risk.
• A commercial-cum-strategic model could ease the public burden, provided commercially used capacity stays available during emergencies.