India is seeking private investors to build a 4-million-tonne strategic petroleum reserve at Chandikhol in Odisha at an estimated cost of ₹8,571 crore. The facility will increase the country’s existing strategic crude storage capacity by 80%.
New Delhi: India is seeking private investors to build its largest strategic petroleum reserve in Odisha. The facility, with a capacity to store four million tonnes (MT) of crude oil, is estimated to cost ₹8,571 crore.
The proposed facility, which will come up at Chandikhol, would increase the nation's existing strategic petroleum storage capacity by 80%.
Dealing with Hormuz Disruptions
The government is offering a grant of up to Rs 5,142 crore, and will award the contract to the bidder seeking the lowest grant, according to tender documents.
The Centre is also looking to lease out about half, or 524,000 tonnes, of the storage capacity at its operational strategic reserve facility in Visakhapatnam for three years, with an option to extend the lease by another four years.
Both developments come as oil producers in West Asia explore ways to store crude outside the region to circumvent the transit bottleneck caused by the war in Iran and the prolonged disruption of energy supplies through the Strait of Hormuz. Last month, Saudi Arabia announced it would begin storing oil in Singapore's rock caverns next year. It already maintains crude storage facilities in Japan and South Korea. The UAE, which stores some crude in India's strategic reserves, announced plans in June to store larger volumes in the country.
State-run Indian Strategic Petroleum Reserves Ltd, which operates the country's strategic reserves, has floated separate tenders for the Odisha project and the partial leasing of the Visakhapatnam facility. Bids for the new facility must be submitted by February 26, 2027, while the deadline for the storage lease is December 1, 2026.
India is accelerating efforts to expand its strategic oil storage after the Hormuz disruption exposed its vulnerability to supply shocks. The strait's sudden closure cut off around 40% of its crude supplies, forcing refiners to scramble for alternative cargoes from across the world, often at higher costs.
The government also directed Oil and Natural Gas Corp to build 1.75 million tonnes of strategic storage capacity in Mangaluru. The state-run producer approved the plan in July.
The Odisha project at Chandikhol has been in the pipeline since 2018, when the Cabinet approved two additional strategic reserves: the 4-million-tonne facility in Odisha and a 2.5-million-tonne project at Padur in Karnataka. Both were planned under a public-private partnership model to limit the government's financial burden. They formed the second phase of India's SPR programme, following the construction of three facilities with a combined capacity of 5.03 million tonnes at Visakhapatnam, Mangaluru and Padur. Commissioned over the past decade, these three facilities cost Rs 4,098 crore to build.
Megha Engineering & Infrastructures Ltd last year won the contract to build the 2.5-million-tonne Padur facility in the second phase. The Odisha project was delayed partly by land acquisition. The process of acquiring around 400 acres at Chandikhol is now at an advanced stage, according to the tender documents.
The government took several years to settle on a commercial model to attract private investors. It provides a grant of up to 60% of the project cost, while the successful bidder gets to build the commercial cum strategic petroleum reserves under the design, build, finance, operate and transfer model.
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