India and the UAE are looking to expedite work on building 30 million barrels of strategic oil reserves. The move comes within weeks of PM Narendra Modi’s visit to UAE where MOUs for this were signed. India, the world’s third-largest consumer of energy, relies on imports for nearly 88% of its crude oil requirements.As India moves to strengthen its energy security amid persistent geopolitical risks in the Middle East, New Delhi and Abu Dhabi have started implementing initiatives announced during PM Modi’s visit to the UAE last month. The plans include expanding strategic crude oil storage capacity and creating a framework for gas reserves.India’s Ambassador to the UAE, Deepak Mittal, said both countries are working towards increasing UAE-linked crude storage capacity in India to 30 million barrels from the current 5.8 million barrels. The expansion is expected to be achieved through a mix of existing underground storage caverns and new infrastructure projects.
India-UAE energy ties: Strategic reserves expansion
Speaking to ET, Mittal said the objective is to move ahead as quickly as possible. He noted that while the target is to raise storage capacity substantially, new facilities could take a few years to become operational depending on factors such as site selection, technical viability and execution timelines. He added that the initiative would involve investments as well as joint participation from both sides.The two countries are also evaluating multiple storage arrangements, including commercial models that could allow crude stored in India to be sold to third countries under certain circumstances. “Strategic reserves can serve multiple purposes. While a portion may be maintained as part of national emergency stockpiles, another portion can be utilised commercially. The stored crude can be sold within India or even supplied to other countries. As production capacity expands, the need for additional storage also increases. Such infrastructure strengthens energy security while offering greater operational flexibility,” he said.Last month, Abu Dhabi National Oil Company (ADNOC) said that any future expansion of its participation in India’s Strategic Petroleum Reserves (SPRs) could involve existing storage facilities at Mangalore as well as potential new sites at Visakhapatnam and Chandikol on India’s eastern coast along the Bay of Bengal. ADNOC currently has access to around 5.86 million barrels of storage capacity at the Mangalore SPR facility.Separately, India and the UAE have agreed to explore the possibility of storing crude oil at Fujairah, the UAE’s key oil hub on the eastern coast. Any such storage arrangement would be treated as part of India’s strategic petroleum reserves.At the same time, the two countries are also advancing discussions on creating a strategic gas reserve framework.“About a decade ago, we began developing strategic petroleum reserves. We are now working towards establishing strategic gas reserves as well,” Mittal said. He noted that several options are being evaluated, including the use of existing LPG storage caverns in India as well as the development of new LNG storage infrastructure.
Why it’s important for India
Last month, industry experts welcomed the agreements, describing them as a significant boost to India’s long-term energy security strategy. The importance of maintaining robust strategic petroleum reserves has come into sharper focus amid the US-Iran conflict, which has exposed vulnerabilities in the energy security frameworks of several major economies. India, now the world’s sixth-largest economy, has faced an unprecedented level of risk from potential supply disruptions in recent times.Strategic petroleum reserves serve as a crucial safeguard during periods of geopolitical tension or disruptions to maritime trade routes, particularly around critical chokepoints such as the Strait of Hormuz. Situations like the ongoing US-Iran conflict highlight how these reserves can cushion countries against sudden supply shocks, help ensure domestic availability of crude oil and limit panic-driven buying in energy markets.India’s reserve capacity remains relatively modest when compared with major economies such as the United States, Japan and China. Against this backdrop, the latest agreements are viewed as an important move towards expanding the country’s storage capabilities.The agreement related to Strategic Petroleum Reserves holds particular significance for India because of its substantial reliance on imported crude oil. Closer collaboration with the UAE on strategic reserves could strengthen India’s emergency storage capacity, improve access to crude supplies during periods of disruption and provide greater flexibility in procurement planning and inventory management.
