‘National interest paramount’: India will prioritise domestic demand before deciding on extra fuel requests from neighbours

Speaking on the same issue at the briefing, ministry of External Affairs (MEA) spokesperson Randhi Jaiswal said, “We have received these requests, and we are examining those requests, keeping in mind our own requirements and availability.”

Some of India’s neighbouring countries—primarily Bangladesh, Sri Lanka, Nepal, and the Maldives—have sought additional fuel supplies from New Delhi beyond the volumes that are regularly supplied to them. With the effective halt in vessel movements through the critical maritime chokepoint of the Strait of Hormuz, global oil and gas supply has been hit, leading to tightness in physical supplies and a surge in oil and gas prices. Unlike China, India has so far not moved to ban fuel exports.

One-fifth of global oil and natural gas supplies usually transit through the Strait of Hormuz—the narrow waterway between Iran and Oman that connects the Persian Gulf with the Gulf of Oman.

India is heavily dependent on West Asia for its energy imports, with a huge chunk of those supplies coming through the Strait of Hormuz. Around 2.5–2.7 million bpd of India’s crude imports—accounting for around half of the country’s total oil imports—have transited the Strait in recent months; the longer-term average is around 40%. This oil is mainly from Iraq, Saudi Arabia, the UAE, and Kuwait; India doesn’t buy Iranian oil due to American sanctions on Tehran. India’s dependence on the Strait for liquefied natural gas (LNG) and liquefied petroleum gas (LPG) supplies is greater than for crude. Roughly 60% of India’s LNG imports come through the Strait of Hormuz; the figure is a staggering 90% in the case of LPG.

In the case of crude oil, India has managed to partly cover the loss in Hormuz volumes by ramping up imports from other regions. India’s Russian oil imports, which had been on a downward trajectory for the past few months, have also shot up significantly since the West Asia conflict began on February 28. In the case of LNG, there is some stress, although supplies to priority sectors are being maintained at fairly high levels. On the LPG front, however, there is a supply crisis due to the extreme dependence on West Asia for the fuel.

Apart from prioritising LPG supplies to households over commercial and industrial consumers, for whom the supply has been cut to a fraction of earlier volumes, the government ordered refiners to maximise LPG production, and directed them to divert propane, butane, and other streams from petrochemical manufacturing to LPG production. According to Sharma, these measures have led to an increase of 40% in domestic LPG production vis-à-vis pre-West Asia conflict levels, and a further increase is likely over the next few days.

India currently has 22 merchant vessels stuck in the Persian Gulf, and a majority of those are oil and gas tankers. They cumulatively hold 3.2 lakh tonnes of liquefied petroleum gas (LPG), 2 lakh tonnes of LNG, and 16 lakh tonnes of crude oil destined for India. According to Jaiswal, India continues to be in constant contact with all relevant governments at various political and diplomatic levels and is making efforts to ensure that Indian vessels can achieve safe and unhindered transit to maintain the country’s energy security. The efforts have seen some success, as two India-flagged LPG tankers arrived at Indian ports from the Persian Gulf earlier this week.