India-UAE talks stall Odisha oil reserve, pushing project cost beyond ₹10,000 crore

The proposed 4-million-tonne strategic petroleum reserve at Chandikhol in Odisha, approved by the Union Cabinet in 2018, is facing further postponement as India and the United Arab Emirates have not finalised the commercial terms of Abu Dhabi National Oil Company’s (ADNOC) involvement. Under a strategic agreement signed in the presence of Prime Minister Narendra Modi, ADNOC would be allowed to store up to 30 million barrels and sell a portion of that crude to Indian refineries, but it is demanding a guarantee that at least 50 percent of the stored oil can be sold before committing investment.

This uncertainty has delayed the issuance of the request for proposal, originally slated for June, and pushed the project’s cost estimate beyond ₹10,000 crore, up from the earlier ₹8,743 crore. The reserve will be built under a public-private partnership, requiring clear rights and obligations for all parties, and will include an on-shore pipeline linking to Paradip and an offshore terminal for large tankers. Land acquisition issues have been largely cleared after the Odisha government leased about 400 acres in Jajpur district. Once operational, the facility will augment India’s crude storage capacity and provide an additional buffer against global supply disruptions.