Top Indian Oil Producer to Build $736MM Strategic Reserves

India’s biggest oil explorer, Oil and Natural Gas Corp., plans to build strategic crude reserves as the country seeks to strengthen its buffers against supply disruptions.

The state-run producer will invest 70 billion rupees ($736 million) to develop underground storage in southern India able to hold about 13 million barrels of crude, Chairman Arun Kumar Singh told reporters in New Delhi on Monday. The land for the project has been acquired and construction will start soon, he said. 

The additional capacity would support the government’s push to expand emergency energy reserves after the Middle East war exposed India’s vulnerability to disruptions due to its heavy import dependence. 

The country currently holds about 39 million barrels in strategic storage, accounting for roughly a week of imports. That pales in comparison to China’s 1.2 billion barrels held in commercial and strategic stockpiles.

Separately, ONGC is in talks with international firms to set up an overseas trading desk for crude, refined fuels and natural gas, seeking greater control over procurement, sales and price risks.

The state-run producer is considering Dubai or Singapore for the venture, with an aim to trade crude, petroleum products and gas worth 50 million tons a year, Singh said.