India Seeks Investors for Rs 8,571 Cr Crude Oil Storage Project

Crude oil storage capacity in India is set to expand as the Centre seeks private investors to build a 4-million-ton strategic petroleum reserve at Chandikhol in Odisha, with an estimated project cost of Rs 8,571 crore.

The government is offering a grant of up to Rs 5,142 crore, and the contract will go to the bidder seeking the “lowest grant”, according to tender details reported on Friday.

The facility is expected to strengthen emergency stocks after disruptions to crude shipments through the Strait of Hormuz highlighted India’s exposure to supply shocks and price volatility.

Key Highlights

• India is seeking private investors for a 4-million-ton crude oil storage facility in Odisha.
• The project carries an estimated investment of Rs 8,571 crore.
• The Central Government will provide a grant of up to Rs 5,142 crore.
• The facility will be developed under the Design, Build, Finance, Operate and Transfer (DBFOT) model.

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How Will the Odisha Project Expand India's Crude Oil Storage Capacity?

The proposed Chandikhol facility will add 4 million tons (MMT) to India's existing strategic petroleum reserve capacity of 5.33 MMT, taking the potential total to 9.33 MMT, an increase of approximately 75 percent.

The existing reserves are located at:

• Visakhapatnam, Andhra Pradesh: 1.33 MMT
• Mangaluru, Karnataka: 1.5 MMT
• Padur, Karnataka: 2.5 MMT

According to the Ministry of Petroleum and Natural Gas, these facilities can meet approximately 9.5 days of national demand.

The expansion is part of the government's Phase-II strategic petroleum reserve program, which also includes a proposed 2.5-MMT facility at Padur in Karnataka.

Why Is the Government Inviting Private Investors?

The government is offering financial support of up to 60 percent of the project's estimated cost to attract private infrastructure developers and reduce its direct funding burden.

Under the DBFOT arrangement, the selected concessionaire will be responsible for developing and operating the facility before transferring it under the agreed concession terms.

The project requires approximately 400 acres of land at Chandikhol in Odisha's Jajpur district. Land acquisition is at an advanced stage, according to the tender documents.

The contract will be awarded to the bidder requiring the lowest government grant, creating competition among prospective investors.

What Does the Expansion Mean for India's Energy Security?

India's crude oil storage capacity has become increasingly important amid disruptions to international oil transportation routes, as seen at the Strait of Hormuz. The government is also pursuing a separate 1.75-MMT strategic storage facility through ONGC at Mangaluru.

Bids for the Chandikhol project must be submitted by February 26, 2027. Its development could strengthen India's ability to maintain emergency crude supplies during international market disruptions.