India, the world’s third-largest oil consumer and importer, is set to construct its inaugural commercial crude oil strategic storage facility to bolster its stockpiles against potential supply disruptions. The Indian Strategic Petroleum Reserves Ltd (ISPRL), established by the government to oversee strategic petroleum reserves, has issued bids for the construction of a 2.5 million-tonne underground storage facility in Padur, Karnataka.
Previously, ISPRL developed strategic petroleum reserves totaling 5.33 million tonnes across three locations during Phase-I, including Visakhapatnam (1.33 million tonnes), Mangalore (1.5 million tonnes), and Padur (2.5 million tonnes). The Phase-II initiative aims to construct a commercial cum strategic petroleum reserve in Padur-II, comprising underground unlined rock caverns and associated above-ground facilities, with an investment of Rs 55.14 billion.
In a departure from Phase-I, Padur-II will be constructed under a public-private partnership (PPP) model, with private entities responsible for design, construction, financing, and operation. Bidders have been asked to submit proposals detailing the financial grant required or the premium/fee offered to the authority. The project will be awarded based on the highest premium offered or the lowest grant sought.
The operator of Padur-II will lease out storage space to oil companies and charge a fee for usage. In case of emergencies, the country will have priority access to stored oil. Bids for the project were due on April 22, with the tender set to be awarded by June 27.
India, heavily reliant on oil imports to meet over 85 per cent of its needs, views strategic reserves as crucial buffers against potential crises such as supply disruptions or conflicts. Notably, Abu Dhabi National Oil Company (Adnoc) has already leased a portion of the Phase-I storage capacity, with negotiations ongoing for the remaining vacant storage slots. Adnoc was recently granted permission to export crude oil stored in Mangalore reserves to enhance operational flexibility.
