India Expands Strategic Reserves with $42 Billion LNG Storage Plan

India plans to expand its strategic petroleum reserves beyond crude oil by building storage facilities for liquefied petroleum gas (LPG) and liquefied natural gas (LNG). The government aims to cover about two months of LNG demand, six weeks of LPG use, and two months of crude oil demand with the new stockpiles.

The plan involves a total cost of $42 billion and will take around 10 years to complete. India currently imports half of its LNG requirements and 60% of its LPG needs from the Middle East. The recent disruptions in energy supplies due to the conflict in the region highlighted India's vulnerabilities.

India's core strategic reserves hold enough oil for only about 5-10 days of consumption, compared to China's 220 million barrels which can last 60 days and Japan's 324 million barrel-reserve that can last 230 days. The US has steadily released oil from its reserves as prices climbed but still has around 37 days of stocks.

The Indian government is considering additional levies for LNG and LPG consumers to finance the construction of the gas reserves, but Prime Minister Narendra Modi has yet to approve the plan due to its potential impact in a high inflation environment.