ONGC Plans India’s First Strategic Natural Gas Reserve to Secure Supplies

Strategic Response to Energy Vulnerability

India’s dependence on imported natural gas—valued at roughly $15 billion annually—has left the nation exposed to geopolitical volatility. With the ongoing war in West Asia disrupting energy supply chains, the government is looking to move beyond its existing strategic petroleum reserves. While India has successfully diversified its crude oil sources, natural gas presents a greater challenge due to the limited number of large-scale global suppliers.

Data from S&P Global Commodities at Sea underscores the severity of the logistics crisis. The situation was further complicated by the closure of the route announced by Iran’s Islamic Revolutionary Guard Corps and recent blockades by Houthi militia in the Bab-al-Mandab Strait.

ONGC Proposal for Depleted Gas Wells

ONGC is currently evaluating a pilot project to create storage in depleted gas wells. By utilizing existing geological formations, the company aims to bypass the high capital expenditure and technical hurdles that stalled earlier government attempts to store gas in salt caverns.

“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.”

ONGC Plans India’s First Strategic Natural Gas Reserve in Depleted Wells

Unnamed source, via Hindustan Times and IndiaIPO

Experts suggest that this approach is far more practical than alternative methods. Manas Majumdar, a partner at PwC India, noted that developing such reserves is now critical. It is the need of the hour for India to develop such strategic gas storages, Majumdar said, pointing to precedents set by the US, China, and Germany.

Balancing Commercial Needs and Emergency Reserves

A central debate surrounding the new reserve model involves how much gas should be kept for emergencies versus how much should be traded. Rajesh Mediratta, managing director of the Indian Gas Exchange, argues that a hybrid model is the most sustainable way to manage the infrastructure.

“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.”

Rajesh Mediratta, Managing Director and Chief Executive of Indian Gas Exchange

Currently, natural gas accounts for about 7% of India’s energy basket, with official targets aiming to increase that figure to 15% by 2030.

Current Infrastructure and Future Outlook

India’s current energy infrastructure includes eight operational onshore LNG terminals with a combined regasification capacity of 52.7 mmtpa. While these terminals provide immediate processing capabilities, they do not function as long-term strategic reserves in the way that underground depleted fields would.

While previous plans to use salt caverns faced technical and financial setbacks, the current emphasis on depleted wells appears to be the most viable path forward for securing the nation’s energy future against further supply chain disruptions.