As the conflict in West Asia intensifies fuelling uncertainty about de-escalation, the oil marketing companies (OMCs) are now aggressively pursuing plans to set up storage sites for liquefied petroleum gas (LPG), the most impacted commodity by the conflict.
Sources said that OMCs have been contemplating establishing more caverns for storing LPG, on the lines of the two caverns India has that can store a cumulative quantity of around 1.40 lakh tonnes.
“OMCs have been working for some time on plans for having more caverns or sites to store LPG. The present war has severely impacted India’s imports. Consequently, they are now moving aggressively on this as a medium-to-long term strategy for locating possible sites and creating storage in caverns like in Mangaluru and Visakhapatnam,” said one of the sources.
This has also been discussed in the Prime Minister’s Office (PMO). Storage for crude oil and LPG are now priority, the source added.
India already has two caverns to store the critical commodity, which is the main cooking medium for more than 33 crore consumers. State-run Hindustan Petroleum Corporation (HPCL) has an 80,000 tonne underground LPG rock cavern in Mangaluru. Similarly, South Asia LPG — a JV of HPCL and TotalEnergies Marketing Holdings India — has a 60,000 tonne cavern in Visakhapatnam.
Cryogenic units
Globally, there are more than 80 LPG storage caverns. Underground Caverns are among the safest options to store the commodity. As a pressurised propane-butane mix, LPG requires costly high-pressure or cryogenic facilities.
A senior official pointed out that the push to have more storage is getting priority now due to the “current crisis”.
“The government’s objective now, more than ever, is to establish storages. The present hostilities have made it quite clear that large consuming nations today have to have storages. This is pertinent not just from the perspective of energy security, but also for strategic autonomy to some extent to deal with frequent weaponisation of such resources,” the official explained.
The government keeps replenishing stocks in the LPG caverns. For instance, the government said on March 16 that the very large gas carrier (VLGC), Shivalik which crossed the Strait of Hormuz (SoH) and reached India with 46,000 tonnes LPG, will unload 26,000 tonnes at HPCL’s cavern in Mangaluru.
The country imports 60 per cent of its demand for the key cooking fuel. India consumed more than 33 million tonnes (mt) of LPG in FY25, of which roughly 20.67 mt was imported. Around 90 per cent of this is imported from West Asia transiting the SoH.
Sources also said that the government is also pushing for more cavern storage for crude oil. It is now fast tracking the setting up of strategic petroleum reserves (SPR) at Odisha and Karnataka. Besides, the assessment of new sites for establishing additional crude oil reserves is a continuous process.
In July 2021, the Oil Ministry approved the establishment of two additional commercial-cum-strategic petroleum reserve facilities with total storage capacity of 6.5 mt in Odisha and Karnataka, on a Public Private Partnership mode at a total project cost of ₹14,527 crore.
This is being overseen by the Special Purpose Vehicle (SPV), Indian Strategic Petroleum Reserve (ISPRL), which has already established SPR facilities of 5.33 mt crude oil at three locations in Andhra Pradesh and Karnataka.