India's state-owned refiners have stepped up production of liquefied petroleum gas, as the country's festive season lifts demand for cooking fuel at a time when conflict in the Persian Gulf continues to disrupt contracted supply.
The world's second-largest importer of LPG, India until recently took the bulk of its supply from the Persian Gulf, a concentration that left it heavily exposed to the conflict and trade upheaval of the past months. To cope, the country took a raft of measures, including cranking up domestic output.
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Indian refiners scaled back that production from wartime highs once alternative cargoes began arriving from the US and Africa over the summer months, and Abu Dhabi National Oil Co. began supplying volumes at Oman's Sohar port. But output has since climbed again, standing currently at about 44,000 tons of LPG a day, according to people familiar with the matter, who asked not to be named given the sensitivity of the issue. That is nearly a fifth more than the average in August.
In part, this is to manage rising demand, as measures taken to ease consumption begin to ease. Last month, rural households were told they would have to wait only 25 days to refill cylinders, down from an emergency 45 days imposed back in March, with officials citing improved supply and lower backlogs.
At the same time, the Hindu festival season has begun and will run until Diwali, the festival of lights, in November. Appetite is likely to stay 10% below the same period last year, largely as industrial demand destroyed during the war - when the government prioritized supply for households — fails to return. But consumers are buying, and winter weather typically provides another boost, potentially forcing refiners to raise domestic production further.
On the supply side, meanwhile, a resurgence in fighting has complicated transits out of the Persian Gulf. One September cargo for Bharat Petroleum Corp. and two for Indian Oil Corp. — all due from Adnoc, the only major Middle East producer supplying LPG to India — could not be collected, the people said. The Abu Dhabi producer has indicated it will supply committed October volumes, including five cargoes to Indian Oil and three each to BPCL and Hindustan Petroleum Corp., they added.
“As India's largest LPG supplier, ADNOC remains fully committed to meeting our customers' needs and supporting India's energy security,” an Adnoc spokesperson said. “We continue to provide reliable and secure LPG supplies to our customers in India and work closely with them to meet their requirements.”
Indian Oil, HPCL and BPCL did not immediately respond to Bloomberg queries.
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The state refiners could also issue a tender this month seeking term supplies from the US amounting to as much as 20% of India's LPG imports next year, the people said. The US, which accounted for just 6% of India's LPG imports last year, has emerged as the country's largest supplier, with its share climbing above 20%.
India signed its first term LPG supply deal with the US last year as part of an effort to diversify away from its heavy dependence on the Middle East. The latest procurement plans would deepen that shift as uncertainty persists over supplies from the Persian Gulf.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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