ONGC Shares Trade Higher on Strategic Oil Reserve Expansion

Shares of Oil and Natural Gas Corporation (ONGC) were trading in the green on 10 July after the company approved the development of a 1.75 million metric tonne (MMT) strategic petroleum reserve at Mangaluru, Karnataka, marking a significant step toward strengthening India’s energy security. 

According to the company’s latest regulatory filing, the project will expand the country’s emergency crude oil storage capacity and reinforce its preparedness against global supply disruptions. While ONGC has not disclosed the project cost or execution timeline, the initiative has been classified as being of “national importance.”

The expansion comes after geopolitical tensions in the Middle East exposed the vulnerability of global energy supply chains, particularly during disruptions around the Strait of Hormuz. 

As one of the world’s largest crude oil importers, India remains heavily dependent on overseas energy supplies, making strategic reserves essential for ensuring uninterrupted availability during crises.

This project represents a notable shift in India’s approach to strategic oil storage. For the first time, ONGC will finance the construction of a strategic petroleum reserve using its own resources, whereas such facilities have traditionally been developed through Indian Strategic Petroleum Reserves Ltd. (ISPRL). 

Once operational, the new cavern will supplement India’s existing 5.33 MMT strategic storage capacity, while two additional government-backed projects at Chandikhol and Padur are also under development to further enhance national reserves.

The proposed facility is expected to be integrated with Mangalore Refinery and Petrochemicals Ltd. (MRPL), an ONGC subsidiary operating a 300,000-barrel-per-day refinery in Karnataka. The Mangaluru strategic storage site already hosts crude oil leased by international companies, including Abu Dhabi National Oil Company (ADNOC), highlighting its strategic importance in India’s energy infrastructure.

Over the past six months, ONGC has continued to focus on projects that enhance long-term energy resilience and national infrastructure. The latest approval aligns with the Government of India’s broader objective of building sufficient crude, LNG and petroleum reserves to improve supply security and reduce exposure to future geopolitical and market-related disruptions.

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