The government has directed refiners to maximise the production of liquefied petroleum gas (LPG) and prioritise domestic supply in order to prevent shortage of the cooking fuel amid supply disruptions caused by the Middle East crisis. According to an order released by the Ministry of Petroleum & Natural Gas (MoPNG), oil refiners in India will be asked to ensure that critical gases such as Propane and Butane must be prioritised for LPG production for households.
The order comes amid escalating tensions in the Middle East which have raised concerns over potential disruptions to global energy supplies and shipping routes, including through the Strait of Hormuz, a key corridor for oil and liquefied gas trade. The war halted tanker traffic through the Strait of Hormuz and disrupted supplies from Qatar, the world's second-largest seller of the fuel.
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India orders OMCs to suuply LPG only for domestic consumers
All oil refiners are asked to "maximise and ensure that propane and butane available with them are utilized for production of LPG", the MoPNG order showed. The government has also asked refiners not to divert Propane and Butane for industrial and pretrochemical production. Further, the government has directed producers to make LPG, propane and butane available to the state-run oil marketing companies (OMCs) - Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd, and Bharat Petroleum Corp Ltd for distribution to households.
The order, issued under Essential Commodities Act, 1955, also showed that the ministry has ordered the state-run OMCs to prioritise selling cooking gas for households or domestic consumers. The move is seen as a way to protect the continous domestic supply for Indian households in case the global supply falls short amid the ongoing geopolitical tensions in the Gulf countries.
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Last year, the world's second-biggest importer of LPG consumed 33.15 million metric tons of cooking gas, which is a mixture of propane and butane. Imports account for about two-thirds of LPG consumption, with the Middle East making up about 85-90% of that supply. This makes domestic supply vulnerable to global price swings and shipping disruptions. India has about 332 million active LPG consumers. Despite a high domestic output, India still relies on imports to meet its LPG demand.
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