The government is planning to build more underground facilities to store crude oil to ensure assured supply during emergencies.

“There have been some discussions on building additional strategic crude reserves in the country. The discussions are in preliminary stages and a final call on capacity and location would be taken after detailed analysis,” oil ministry officials said.

Indian Strategic Petroleum Reserves Limited (ISPRL) has already built facilities under the first phase of the programme, while the construction of the underground facilities are on under the second phase to be completed by 2025. The current discussions relate to the third phase. India meets about 82 per cent of its crude needs through imports.

According to Opec estimates, world oil demand is expected to increase by 14.5 million barrels a day (mbd) to 111.7 mbd in 2040 from 97.2 mbd in 2017. India will account for 5.8 mbd, an astonishing 40 per cent of the increase.

Along with commercial reserves for 65 days with the oil refining companies, total reserves will touch about 87 days after the second phase. The government wants to cross the 90-day mark with the third phase of 5.5 million tonnes of reserves, sources said.

The reserves of three months will provide cushion to the government to manage its crude requirements that are currently imported from various sources in west Asia and the far eastern countries.

Apart from providing fallback arrangement in terms of volatility in crude markets, the government will use the reserves in times of exigencies such as conflicts and war.

Under the first phase, ISPRL has constructed underground rock caverns for storage of 5.33 million tonnes (mt) of crude at three locations — Visakhapatnam (1.33mt), Mangalore (1.5mt) and Padur (2.5mt).

Under the second phase, the government has given approval in June 2018 to construct 6.5mt of facilities at Chandikhol in Odisha and Padur in Karnataka.