Can one oil cavern change how India handles war time energy shocks

India’s move to ask ONGC to build and fill a ₹15,000 crore strategic oil reserve at Mangaluru shows how seriously New Delhi now views the Iran war and Hormuz risk. This new 1.75 MMT underground cavern will raise India’s emergency crude capacity by about one third and so slightly narrow the energy security gap with bigger economies.

India today consumes around 5 million barrels of oil a day but its current strategic capacity of 5.33 million tonnes, roughly 39 million barrels, is tiny when we compare it with China, the United States or Japan. At the end of 2025, India held just 21 million barrels in strategic stock, while China had about 1,397 million, the US 413 million and Japan 263 million, so any long war in West Asia hits India faster. The Iran war that started on 28 February pushed prices up and exposed these gaps, so Indian refiners had to rush to find cargoes worldwide while China could temporarily cut imports because it could fall back on deeper reserves.

The Mangaluru project is also a big shift in who pays for security because this is the first time a state firm like ONGC has been asked to both build and fill a strategic reserve that earlier was funded from the Budget and run by ISPRL. ONGC already has land in Mangaluru, so it may spend about ₹5,000 crore on building the rock cavern and another ₹10,000 crore to buy crude at current prices, but the government has not yet said clearly how the company will recover this money or how much of the capacity, if any, can be used commercially. Earlier, policy changed to allow ISPRL to lease about 30 per cent of capacity to refiners or traders and use 20 per cent of stored crude for trading, and now a PPP model has been cleared for new sites at Chandikhol and Padur with private developers like Megha Engineering using viability gap funding and leasing to recover costs.