In order to ensure continued availability of cooking gas to crores of Indian households amid the West Asia crisis, the government has invoked emergency powers derived from the Essential Commodities Act to direct Indian refiners to maximise liquefied petroleum gas (LPG) production and ensure that all the gas is supplied solely to domestic LPG consumers and not used to produce petrochemicals. The bulk of India’s LPG demand is met through imports, and over 80% of these volumes come via the critical chokepoint of the Strait of Hormuz, where vessel movements have effectively come to a halt due to the West Asia conflict.
“All oil refining companies operating in India shall maximize and ensure that Propane and Butane streams produced, recovered, fractionated or otherwise available with them are utilized for production of Liquefied Petroleum Gas (LPG) and make it available to the three Public sector OMCs (oil marketing companies)…All oil refining companies shall not divert, utilize, process, crack, convert or otherwise employ Propane or Butane streams for manufacture of petrochemical products or other such downstream derivatives,” the Ministry of Petroleum and Natural Gas (MoPNG) said in an order. LPG is a mixture of propane and butane.
“All public sector OMCs shall ensure that LPG so procured is supplied/marketed solely to consumers of domestic LPG only,” it added. The three OMCs—Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL)—supply almost all of the LPG consumed by Indian households. According to a senior government official, LPG was the “most vulnerable” segment to the West Asian conflict—now in its seventh day—given the the massive scale of cooking gas customer base; India has over 33 crore domestic LPG consumers.
This order, applicable to public sector as well as private sector refiners, has been issued under specific clauses of the Petroleum Products (Maintenance of Production, Storage and Supply) Order, 1999, read with Section 3 of the Essential Commodities Act, 1955. Although India has spare refining capacity, its own LPG production is limited with heavy reliance on imports. The country’s LPG consumption in 2024-25 was around 31 million tonnes of LPG, of which just about 13 million tonnes was the domestic production, which translates to import dependency of around 58%.
According to sources in the know, the government and Indian oil and gas companies are in touch with all international suppliers, including national oil companies and even large traders like Vitol, Trafigura, and ADNOC Trading, to source additional volumes of crude oil and LPG from their international portfolios in view of the West Asia conflict, even as the country is in a “comfortable” position to prevent any near-term shortage of major fuels like petrol, diesel, and LPG. Some LPG volumes under the recently-inked import contract with the US have also started coming in. The sources also assured that there was no need at present to ration fuels, while also ruling out any increase in retail fuel prices for the time being.
Under the US LPG deal, announced in November, India’s public sector oil companies will import about 2.2 million tonnes of LPG, or roughly 10% of annual imports, in 2026 from the US Gulf Coast. Much of India’s requirement being imported from countries like Saudi Arabia, United Arab Emirates, Qatar, and Kuwait. This deal is expected to reduce India’s dependence for LPG on its traditional West Asian suppliers.
According to a senior government official, Indian refiners currently have crude oil stocks to last around 25 days, and around half of these would be replenished on an ongoing basis as supply from non-Hormuz regions continues unabated. This inventory includes oil in refiners’ storage tanks and pipelines, and on tankers in transit. Also, India has strategic petroleum reserves that are currently estimated to hold crude reserves worth another week or so of the country’s daily oil consumption of 5.6 million bpd. Additionally, Indian refiners have sufficient stocks of major fuels like petrol, diesel, and LPG for another 25 days’ worth of domestic demand.
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While over 80% of India’s LPG imports come through the Strait of Hormuz—the narrow waterway between Iran and Oman that connects the Persian Gulf with the Gulf of Oman and the Arabian Sea—40% of India’s oil imports and over half of its liquefied natural gas (LNG) imports come through the chokepoint.
India’s cushion is thinner when it comes to LNG as additional LNG stockpiling is significantly more challenging than crude oil and petroleum fuels. India, the world’s fourth-largest LNG importer, is actively scouting for additional LNG cargoes from other source markets. The senior government official quoted above said that one LNG cargo was bought by an Indian company from the spot market on Thursday, and more cargoes are expected to be picked up over the coming days.
Some concern is already visible in the natural gas sector due to the West Asia conflict. India’s largest LNG importer Petronet LNG has issued force majeure notices to its key supplier QatarEnergy, and its off-takers in India. Moreover, QatarEnergy has also issued a notice indicating a potential force majeure due to the conflict, which has forced the LNG producer to halt production.
Natural gas supplies to some sectors in India have already been reduced in the anticipation of tighter LNG deliveries. Government sources indicated that if the situation worsens, reprioritisation of sectoral gas allocation may be undertaken to ensure that the critical sectors don’t suffer for want of fuel. Some sectors can also switch to alternative fuels, they said. Domestic natural gas is allocated to various sectors—like city gas distribution, fertilisers, and power—based on a priority list.
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