India is seeking private investors to build and operate what would be the country's largest strategic petroleum reserve site, a project that would lift national strategic reserve capacity by 80% at an estimated cost of USD 910 million, according to local media reports citing tender documents.

The Economic Times reported that the proposed facility would sit at Chandikhol in the eastern state of Odisha, on the Bay of Bengal, and would be able to hold up to 4 million tons of crude oil.

Grant Offered to Support Private Participation

To encourage private-sector involvement, the government is offering a grant of USD 546 million, equivalent to 51.4 billion Indian rupees, the newspaper reported. Under the tender terms, bids are due by February 26, 2027.

The size of the grant relative to the total estimated project cost is notable. With the project priced at USD 910 million and the grant set at USD 546 million, public support would cover a large share of the expected outlay, according to the figures reported from the tender documents.

Existing Reserves Cover Only Eight Days of Demand

India's existing underground strategic reserve storage totals 5.33 million metric tons of crude oil, or 39 million barrels. That volume covers only eight days of national oil consumption.

India ranks among the largest crude oil importers and is among the most exposed to supply shocks, as its current maximum reserve capacity covers only eight days of national oil demand.

Expanding the reserve was already a strategic priority before the Strait of Hormuz was closed. The supply disruption early this year, however, prompted the world's third-largest crude importer to accelerate its plans for new strategic reserve sites.

ONGC to Build Separate Site at Mangaluru

The Chandikhol project is not the only expansion under way. State-owned Oil and Natural Gas Corporation, the country's top explorer, will build a new storage site at Mangaluru designed to hold about 13 million barrels of oil.

Market Backdrop

Data cited alongside the report from the World Bank Pink Sheet show crude prices elevated. Brent crude stood at 125.00 dollars per barrel, up 7.0%. WTI was at 97.70 dollars per barrel, up 0.8% from the prior month, while Dubai crude was at 102.70 dollars per barrel, up 10.1%.

Domestic Industry Landscape

India's crude oil production sector includes state-owned and private-sector companies operating across upstream exploration and production.

Oil and Natural Gas Corporation (ONGC) is the country's largest crude oil and natural gas producer, contributing around 71% of domestic hydrocarbon production. Oil India Limited (OIL) is another major state-owned upstream producer.

Reliance Industries Limited operates the KG-D6 block in the Krishna-Godavari Basin, where its projects include the R Cluster, Satellite Cluster, and MJ fields.

Vedanta Limited's Cairn Oil & Gas business is also a major private-sector participant in India's upstream oil and gas industry.

Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Limited, and Indian Oil Corporation Limited operate major refining businesses, while Nayara Energy operates the Vadinar refinery in Gujarat.

The tender documents themselves, as reported, specify the project location, the 4-million-ton capacity ceiling, the grant amount, and the February 26, 2027, bid deadline.

Staying Ahead of India's Energy Build-Out: From Offshore Blocks to Refinery Expansions

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