India Accelerates Chandikhol Project to Secure Oil Reserves Amid Iran Conflict Threats to Global Crude Supplies

India Accelerates Strategic Petroleum Reserve Projects Amid Global Uncertainty

Indian Strategic Petroleum Reserve Ltd (ISPRL) is set to float a tender by the end of April 2024 for a 4-million-tonne facility at Chandikhol in Odisha, a project approved five years ago but delayed. In parallel, progress on another reserve at Padur in Karnataka is also being pushed forward.

The renewed urgency comes as geopolitical tensions threaten critical supply routes, prompting the government to revisit its energy security strategy. The Chandikhol project alone is expected to cost around $1 billion to build, with an additional $3 billion required to fill the reserve.

Megha Engineering and Infrastructures Ltd (MEIL) has secured a work order for a 2.5-million-tonne crude storage project at Padur, marking India's first strategic reserve under a public-private partnership (PPP) model. The project includes underground storage caverns, along with associated pipelines and offshore infrastructure, and was awarded to MEIL in September 2025.

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Capacity Expansion Plans Gather Pace

India currently has a strategic reserve capacity of 5.3 million tonnes. The government has already approved an additional 6.5 million tonnes of storage, including the Chandikhol and Padur expansions cleared by the Union Cabinet in 2021.

Hormuz Disruption Risk Triggers Urgency

The acceleration in projects comes as the blockade of the Strait of Hormuz threatens global energy flows. The route handles roughly 20% of global energy shipments and accounts for about 40% of India's crude supplies.

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India imports nearly 90% of its oil requirement, making it highly exposed to global disruptions. A $1 rise in crude prices sustained over a year could increase India's import bill by about Rs 16,000 crore, with implications for inflation, growth, and the external sector.