UPSC Mains
GS Paper III
Energy Security
Can India Build a Strategic Fuel System?
A proposed 10-year, ~$42 billion strategic fuel programme raises a key question — is storage alone enough, or does India need an integrated infrastructure system?
PROPOSED 10-YR ADDITION
28 MT Crude + 9 MT LNG + 4 MT LPG
CRUDE IMPORT DEPENDENCE
Over 85%
ESTIMATED PROGRAMME COST
~$42 Billion
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Context & India’s Current Storage Position
- Repeated West Asia disruptions have exposed gaps in India’s energy security. The government is weighing a 10-year strategic fuel programme, but storage alone cannot guarantee supply — transport, pipelines and governance matter equally.
Crude Oil (Most Mature)
Phase-I SPR: 5.33 MT across Visakhapatnam, Mangaluru, Padur (~63-64% utilised). Phase-II (6.5 MT) delayed by land-acquisition hurdles.
LPG (Limited Footprint)
Existing caverns hold only ~0.14 MT. The proposed 4 MT reserve is a ~30-fold scale-up.
Natural Gas (Largest Gap)
India has no operational underground gas-storage facility — gas security depends entirely on imports, terminals and pipelines.
Storage ≠ Usable Inventory
Capacity is how much a facility can store; inventory is how much it actually holds. In a crisis, what matters is how fast fuel reaches consumers.
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Why Storage Alone Isn’t Enough
- Logistics risk: Vulnerable chokepoints like the Strait of Hormuz threaten whether fuel can even reach India — prompting a $1.5-2 billion JV to acquire 59 ships and reduce reliance on foreign vessels.
- Deliverability gap: ~1,800 km of new LPG pipelines (~$0.7 billion) are authorised, but pipelines alone don’t add strategic storage — underground gas storage needs injection/withdrawal at grid rate, LNG tanks need regasification, LPG caverns need bottling links.
The 9 MT LNG reserve equals ~56 days of LNG imports — far larger than short-term emergency needs — meaning regasification capacity, not just storage, becomes the binding constraint.
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Way Forward — An Integrated Framework
Fast-Track Phase-II SPR
Resolve land-acquisition and PPP bottlenecks at Chandikhol and Padur.
Develop Underground Gas Storage
Depleted fields and salt caverns in KG, Cambay, Mumbai Offshore and Rajasthan basins, after geological study.
Strengthen Shipping Fleet
Secure domestic control over energy transport and Sea Lanes of Communication.
Diversify & Align Norms
Diversify sourcing (Algeria, US, Africa) and align stockholding with IEA-style 90-day import norms.
Four interlocking pillars: Reserves buy time, shipping brings the next cargo, pipelines deliver fuel inland, and governance dictates emergency execution — 41 MT of storage is only part of the equation.
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Source: The Hindu
