IAS Gyan

Daily News Analysis


20th July, 2023 Economy

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Context: India, like many other countries, relies heavily on imported energy resources, including crude oil and natural gas. To safeguard its energy security and hedge against price volatility, India has already developed strategic crude oil reserves with a capacity of 5.33 million tonnes. Now, India is exploring the possibility of developing strategic gas reserves to ensure a stable supply of natural gas in times of crisis or price fluctuations.


  • Strategic gas storage is a concept of building and maintaining large reserves of natural gas in underground or above-ground facilities that can be utilised in emergencies and supply disruptions, and serve as a hedge against extreme price volatility in the international market.
  • India, currently, has no strategic natural gas storage facilities even as its gas consumption is expected to grow significantly over the next few years. India already has strategic crude oil reserves with a capacity to hold 5.33 million tonnes of oil in underground caverns, fit to meet around 9.5 days of the country’s oil demand. The capacity is being expanded by another 6.5 million tonnes in the second phase of the project.
  • India is exploring building strategic natural gas storage facilities in the country on the lines of strategic crude oil reserves in a bid to have a large gas stockpile that can be utilised in emergencies and supply disruptions and serve as a hedge against extreme price volatility in the international market.


  • Underground Storage: Depleted oil and gas reservoirs, natural aquifers, and salt caverns offer secure and cost-effective options for storing natural gas in the gaseous state.
  • LNG Storage: Natural gas can also be stored in its liquefied form as LNG in large above-ground tanks, providing an additional option for strategic stockpiling.
  • Energy Security: The development of strategic gas stockpiles will enhance India's energy security by ensuring a steady supply of natural gas during supply disruptions or price fluctuations.
  • Price Hedging: Maintaining strategic gas reserves allows India to hedge against price volatility in the global natural gas market.


  • Energy Security: Developing strategic gas reserves is crucial for India's energy security as it ensures a reliable and uninterrupted supply of natural gas. In times of supply disruptions or geopolitical uncertainties, these reserves act as a buffer, ensuring stability in the country's energy sector.
  • Price Stability: Strategic gas reserves enable India to mitigate the impact of sudden spikes in global gas prices. By having reserves in place, the country can use them during periods of price volatility, reducing the reliance on expensive imports and stabilizing domestic gas prices.
  • Economic Resilience: Having strategic reserves can protect India from sudden spikes in natural gas prices, which can have significant economic implications.
  • Geopolitical Leverage: By having reserves, India can negotiate better terms with gas suppliers, as it can rely on its strategic stockpiles during times of supply constraints.


  • Infrastructure Development: Establishing the required infrastructure for gas storage, including retrofitting depleted reservoirs or building LNG tanks, involves significant investment and technical challenges.
  • Cost Considerations: The cost of setting up and maintaining strategic gas reserves needs to be balanced against potential benefits in terms of energy security and price hedging.
  • Regulatory Framework: Clear regulations and policies need to be in place to govern the ownership, management, and utilization of strategic gas reserves.

Ways forward

  • Feasibility Studies: Thorough feasibility studies and assessments of potential storage sites are essential to identify suitable locations for strategic gas reserves.
  • Public-Private Partnerships: Collaboration between the government and private sector can accelerate the development of strategic gas stockpiles, leveraging expertise and resources.
  • Gradual Implementation: The establishment of strategic gas reserves can be done in phases, gradually increasing storage capacity based on demand and economic viability.
  • Integrated Energy Policy: Developing a comprehensive energy policy that addresses both crude oil and natural gas reserves will ensure a cohesive approach to energy security.
  • International Cooperation: Exploring opportunities for international partnerships and cooperation in gas storage can enhance India's energy security and regional cooperation.


  • The exploration of developing strategic gas stockpiles in India demonstrates the country's commitment to ensuring energy security and resilience in the face of potential supply disruptions and price fluctuations in the global natural gas market. While there are challenges to address, careful planning, collaboration, and a comprehensive energy policy can pave the way for successful implementation and long-term benefits

Must-Read Articles:

STRATEGIC PETROLEUM RESERVES: https://www.iasgyan.in/daily-current-affairs/strategic-petroleum-reserves

GAS BASED ECONOMY: https://www.iasgyan.in/daily-current-affairs/gas-based-economy


Q. What is the significance of developing strategic gas reserves in India, and what challenges does the country face in establishing these reserves? How can India overcome these challenges and pave the way forward for successful implementation?