Can India build a strategic fuel system? | Explained

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West Asia-related disruptions have exposed a vulnerability in India’s energy-security system. India can import large quantities of crude oil, LNG and LPG, but its ability to store, transport and release these fuels during a prolonged disruption differs sharply by fuel. India already operates underground strategic crude-oil storage and two underground LPG caverns, but has no operating underground natural-gas storage facility.

Against this background, the government is considering a decade-long strategic-fuel programme that would add about 28 MT of crude-oil storage, 9 MT of LNG storage and 4 MT of LPG storage. Reuters reports that the proposed reserves are intended to provide nearly two months of crude and LNG demand and about six weeks of LPG demand. The programme remains under consideration and should therefore be treated as a proposed target, not committed capacity.

India’s position varies considerably by fuel. For crude oil, Phase I of the Strategic Petroleum Reserve provides 5.33 MT of underground capacity, with actual storage of about 3.37 MT, or roughly 63-64% utilisation, across Visakhapatnam, Mangaluru and Padur. A further 6.5 MT has been approved under Phase II at Chandikhol and Padur.

However, execution on the Chandikhol project remains protracted amid ongoing land acquisition requirements and finalisation of commercial PPP frameworks.

LPG has a much smaller underground footprint. The Visakhapatnam and Mangaluru caverns together provide about 0.14 MT of capacity. A proposed 4 MT strategic reserve would therefore represent roughly a 30-fold increase in underground LPG capacity.

Natural gas presents the largest storage gap. India currently has no operational underground gas-storage facility. Its gas-security system instead depends on domestic production, LNG imports, import terminals, commercial inventories and pipelines.

These figures also highlight an important distinction between storage capacity and inventory. A facility has a physical capacity, but the fuel it holds can vary. Not all inventory is necessarily 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 LNG 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 is different: LNG is first regasified and the resulting natural gas is injected into a depleted reservoir or cavern.

The PNGRB–ICF study provides a useful but narrowly defined stress test. Its 2030 scenario examined how much additional LNG infrastructure would be required to supply priority consumers for 20 days under stress conditions.