India Seeks Private Investors for $910 Million Oil Reserve

India is seeking private investors to establish and manage the country's largest strategic petroleum reserve (SPR) site, which will increase India's SPR capacity by 80%, according to local media. The tender documents shared with the press report that the project will cost approximately $910 million. The proposed SPR site will be situated at Chandikhol, located in the eastern Indian state of Odisha, adjacent to the Bay of Bengal. This facility is designed to hold up to 4 million tons of crude oil.

To incentivize private investment in the project, the Indian government is offering a grant of $546 million, equivalent to 51.4 billion Indian rupees. Bids for the project are expected to be submitted by February 26, 2027, as per the terms of the tender. Presently, India's underground Strategic Petroleum Reserve storage capacity stands at a meager 5.33 million metric tons of crude oil, which is approximately 39 million barrels or eight days' worth of India's oil consumption.

India's SPR expansion has been a strategic priority for the nation even before the Strait of Hormuz was closed. However, the recent supply disruption caused by the closure of the Strait of Hormuz has accelerated India's plans to build strategic reserve sites. State-owned Oil and Natural Gas Corporation (ONGC), India's leading oil explorer, will construct a new storage site at Mangaluru, capable of holding about 13 million barrels of oil.

Following the Iran war and the subsequent disruption in crude flows at the Strait of Hormuz, India has been actively searching for alternative sources to compensate for the lost Middle Eastern supply. While record crude oil imports from Russia have somewhat mitigated the impact, India has realized the need for additional storage sites to accommodate commercial and strategic reserves.

Currently, India is one of the world's largest crude oil importers, but it is also highly vulnerable to supply shocks as its current maximum reserve capacity can only cover eight days of national oil demand.