India’s Proposed Strategic Fuel Reserve Programme
Prelims:
Indian Economy
& Geography
Mains:
GS Paper III –
Infrastructure, Energy
Current relevance:
India
is considering a decade-long strategic-fuel programme to strengthen
energy security by expanding storage capacity for crude oil, LNG and LPG.
Highlights:
India’s Existing Strategic
Storage:
1.
Crude
Oil: Phase I of the Strategic
Petroleum Reserve (SPR) provides 5.33 MT of underground capacity at Visakhapatnam,
Mangaluru and Padur.
2.
Actual
crude storage is around 3.37 MT, corresponding to roughly 63–64%
utilisation.
3.
Phase
II: An additional 6.5
MT has been approved at Chandikhol and Padur, though the Chandikhol
project faces delays related to land acquisition and finalisation of the PPP
framework.
4.
LPG: Underground caverns at Visakhapatnam
and Mangaluru together provide about 0.14 MT capacity.
5.
Natural
Gas: India currently
has no operational underground natural-gas storage facility. Its
gas-security system relies on domestic production, LNG imports, import
terminals, commercial inventories and pipelines.
Proposed Strategic Fuel
Programme:
The proposed
programme would significantly expand India's reserve capacity:
1.
28
MT of crude-oil storage
to provide nearly two months of demand cover,
2.
9
MT of LNG storage to
provide approximately two months of LNG import cover,
3.
4
MT of LPG storage to
provide about six weeks of demand cover.
The proposed 4 MT LPG reserve alone
would represent nearly a 30-fold increase over India’s existing underground LPG
storage capacity.
LNG Storage vs Underground
Natural-Gas Storage:
1.
An LNG
regasification terminal receives LNG and converts it into natural gas, but
its regasification capacity does not itself constitute strategic inventory.
2.
LNG
is stored as a cryogenic liquid at around –162°C, requiring insulated
tanks and boil-off gas management.
3.
Underground
gas storage works
differently: LNG is first regasified and the resulting natural gas can then be
injected into a suitable depleted reservoir or cavern.
4.
For
longer-duration storage, depleted oil and gas reservoirs could provide
large volumes; they account for around 74% of global working gas volume.
5.
Salt
caverns provide faster
injection and withdrawal and allow more frequent cycling, making them
potentially useful for shorter-duration balancing.
6.
Potential
Indian locations include sedimentary basins such as Krishna-Godavari,
Cambay, Mumbai Offshore and Rajasthan, subject to geological and
engineering suitability.
From Fuel Storage to Energy
Security:
1.
Strategic
reserves: Energy
security depends not merely on the physical storage capacity, but on the
actual quantity of fuel available for emergency use.
2.
Rapid
withdrawal: Stored fuel
must be capable of quick withdrawal and mobilisation during supply
disruptions.
3.
Transport
connectivity: Effective
reserves require integration with shipping networks and pipelines to
move fuel from storage facilities to demand centres.
4.
Distribution
infrastructure: LPG
reserves need supporting import terminals, pipelines, pumping systems and
bottling infrastructure for effective distribution.
5.
Gas-grid
integration:
Underground natural-gas storage becomes strategically useful only when it is adequately
connected to the gas grid for timely injection and withdrawal.
Maritime & Pipeline
Connectivity:
India's energy
security is strongly linked to maritime logistics, including vulnerable
chokepoints such as the Strait of Hormuz and long-distance supply
routes.
1.
State-run
oil refiners and the Shipping Corporation of India plan a $1.5–2
billion joint venture to acquire 59 ships, reducing reliance on foreign
vessels.
2.
Indian
Oil is diversifying sourcing through new agreements with Algeria, increased
U.S. purchases and possible stakes in Very Large Gas Carriers.
3.
Around
1,800 km of new LPG pipelines across six States have recently been
authorised, involving approximately $0.7 billion of investment.
4.
Pipelines
do not create additional strategic reserves; their importance lies in improving
deliverability from storage/import points to inland markets.
Governance, Financing &
Strategic Significance:
1.
The
reported programme could involve around $42 billion, combining storage
infrastructure CAPEX and the cost of purchasing strategic inventories,
though this figure has not been confirmed by the government.
2.
Strategic
reserves create continuing financial obligations because fuel must be purchased,
maintained and replenished after emergency releases.
3.
An
effective framework must clearly determine inventory ownership, financing,
minimum stock obligations, emergency-release authority, replenishment
responsibility and price risk.
4.
A commercial-cum-strategic
model could reduce the public financial burden, provided commercially
utilised capacity remains available during emergencies.
Source: THE
HINDU -