Strategic Petroleum Reserves (SPR) Programme

Published on 25 Feb 2025

The Strategic Petroleum Reserves (SPR) Programme in India is a crucial initiative aimed at enhancing the country’s energy security by creating emergency fuel storage facilities. 

• Energy Security and Supply Stability

• Purpose: The SPR programme was established to mitigate risks associated with supply disruptions, ensuring a steady supply of crude oil during emergencies like geopolitical tensions or natural disasters.

• Capacity: India’s SPR currently holds about 5.33 million tonnes of crude oil, equivalent to around 9.5 days of the country's oil needs, with plans to expand this to 22 days.

• Government Investments and Expansion

• Initial Phase: The first phase, completed in 2018, included facilities at Vishakhapatnam, Mangaluru, and Padur with a combined capacity of 5.33 million tonnes.

• Expansion Plans: Under Phase II, the government is adding an additional 6.5 million tonnes capacity in Chandikhol (Odisha) and Padur (Karnataka), increasing the total capacity to nearly 12 million tonnes.

• Cost-Effective Procurement

• Market Dynamics: India utilizes low global oil prices to fill its SPR, saving foreign exchange. For example, during the 2020 oil price crash, India saved approximately $685 million by purchasing crude for its reserves.

• Strategic Stockpiling: The reserves allow India to buy oil when prices are low, reducing the impact of price volatility on the economy.

• Private Sector Participation

• PPP Model: The government is exploring public-private partnerships (PPP) to expand SPR infrastructure, involving companies like ADNOC (Abu Dhabi National Oil Company) in filling and managing these reserves.

• Investment Incentives: Offering storage space to private entities for their own crude oil stocks within SPR facilities, further integrating the private sector into national energy security.

• International Collaboration

• Global Partnerships: India has signed agreements with countries like the UAE and the U.S. for reciprocal oil storage, where India can access crude stored abroad during emergencies.

• Strategic Alliances: These collaborations enhance global energy ties and provide India with additional security in times of international supply crises.

• Economic Benefits

• Forex Savings: The SPR programme helps reduce the need for emergency imports, conserving foreign exchange reserves, which stood at $575 billion in August 2023.

• Price Stabilization: The reserves provide a buffer against oil price spikes, helping to stabilize domestic fuel prices, which is crucial for controlling inflation.

• Future Prospects

• Capacity Enhancement: Plans to expand SPR capacity to cover 22 days of consumption, with additional sites under consideration, demonstrate India's commitment to long-term energy security.

• Renewable Integration: Discussions on integrating SPR with renewable energy storage systems are underway, aligning with India’s broader energy transition goals.

Tags:
Economy

Keywords:
Conventional energy Petroleum Strategic petroleum reserves Energy security

Syllabus:
General Studies Paper 3

Topics:
Infrastructure Development