The move comes after the Indian government’s earlier plan to create underground natural gas storage facilities in salt caverns failed to progress due to high capital costs and complex technical challenges. ONGC’s proposed initiative aims to strengthen India’s energy security by creating a reserve capable of reducing the impact of global supply disruptions.
A strategic natural gas reserve could provide critical support during energy crises such as the West Asia war, which has affected global energy supply chains and highlighted India’s dependence on imported natural gas. India currently imports around 55% of its natural gas requirements, with the annual import value estimated at approximately $15 billion.
The proposal follows ONGC’s recent announcement to develop a 1.75 million-tonne strategic crude oil storage facility. India currently maintains strategic petroleum reserves with a total capacity of 5.2 million tonnes.
“The plan is to initially come up with a pilot. The consideration right now is to do a feasibility survey and develop a reserve or storage in a depleted gas well, as that would be ready to handle the pressure of natural gas and the geology is already meant for it,” one of the two people cited above said.
Apart from salt caverns, aquifers are also considered an option for underground natural gas storage. A deep, water-bearing porous rock formation can be converted into an artificial underground gas reservoir by injecting gas at high pressure, forcing water out and trapping the gas safely beneath an impermeable cap rock.
Earlier, Mint reported on 4 March that the Petroleum and Natural Gas Regulatory Board (PNGRB) was considering a proposal to recommend the establishment of overground storage tanks near liquefied natural gas (LNG) terminals across India.
However, experts have suggested that strategic reserves should include a commercial component to ensure financial sustainability. Rajesh Mediratta, managing director and chief executive of Indian Gas Exchange, said a portion of the reserve should be available for commercial operations.
“Suppose the reserve is for 5 BCM (billion cubic metres). About 2 BCM can be used under a commercial model that can be easily traded and refilled, and the rest should be kept for strategic use only in an emergency situation. This will develop a functional revenue model as witnessed in Europe,” he said.
Mediratta added that depleted gas fields should remain the preferred option for natural gas storage because existing infrastructure can be utilised and capital expenditure would be significantly lower compared with developing salt cavern facilities.
Queries sent to ONGC and the Union petroleum ministry seeking details on the proposed project remained unanswered.
“It is the need of the hour for India to develop such strategic gas storages. Several countries including China, US, Germany and Europe as a whole have set precedents in the case of such long-term storage infrastructure,” said Manas Majumdar, partner and leader, oil and gas at PwC India.
India has diversified its crude oil import sources over the past few years, but LNG imports cannot be expanded at the same pace due to limited availability of major suppliers globally. The United States and Angola are among the key LNG suppliers, along with Qatar and the United Arab Emirates, which have been affected by the ongoing war and disruptions in the Strait of Hormuz.
According to data from S&P Global Commodities at Sea, only 16 vessels transited through the Strait of Hormuz on 20 July, compared with more than 130 vessels before the war.
ONGC’s proposed strategic natural gas reserve marks a significant step towards building long-term energy resilience for India. With rising dependence on imported gas and increasing global uncertainties affecting energy markets, the development of domestic storage infrastructure could play a crucial role in safeguarding supply stability during future disruptions.
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