India’s state-owned refineries have significantly increased their production of liquefied petroleum gas (LPG) while difficulties in receiving shipments from the Persian Gulf put pressure on the country’s supply. Local production reached around 44,000 tons per day in September, almost 20% higher than the average recorded during August.
The increase comes at a particularly sensitive time for the Indian market. The festive season is driving up domestic consumption of cooking gas, while disruptions to Gulf shipping routes continue to complicate some contracted imports.
Furthermore, India had previously reduced production from the high levels reached during the conflict after receiving alternative shipments from the United States and Africa. However, new logistical difficulties led refineries to increase domestic supply once again.
Supplies from the Persian Gulf remain under pressure
On the other hand, the restrictions surrounding the Strait of Hormuz yhey have disrupted a strategic route for India’s energy imports. The country relied heavily on the Persian Gulf to supply its LPG market, a concentration that increased its vulnerability to regional disruptions.
In September, a shipment destined for Bharat Petroleum Corporation (BPCL) and two others for Indian Oil Corporation could not be collected. All three were scheduled to arrive from ADNOC, India’s main supplier of LPG from the Middle East.
Despite these difficulties, the Abu Dhabi-based company has indicated that it will maintain the volumes committed for October. The schedule includes five cargoes for Indian Oil and three for BPCL, in addition to three more for Hindustan Petroleum Corporation (HPCL).
“As India’s largest LPG supplier, ADNOC remains firmly committed to meeting our customers’ needs and supporting the country’s energy security.”
A company spokesperson told Bloomberg.
India strengthens LPG production and diversifies suppliers
Meanwhile, New Delhi has accelerated its search for suppliers outside the Middle East. The United States and Africa have become increasingly important in this diversification strategy, and US shipments already occupy a significant position in the Indian market.
The United States accounted for around 6% of Indian LPG imports last year. Its share has now exceeded 20%, according to data collected by the media outlets analyzed.
Similarly, state-owned refineries could seek new forward supply contracts from the United States through a bidding process. The volumes considered could represent up to 20% of India’s LPG imports next year.
This move would expand upon a strategy initiated with the first Indian agreement of LPG supply in the United States. For India, expanding the number of suppliers reduces dependence on Persian Gulf routes at a time of high logistical uncertainty.
The festive season sustains domestic consumption
Adding to the pressure on supply is the domestic calendar. The Hindu festival season extends until Diwali in November and typically increases cooking fuel consumption. Around 60% of Indian households use LPG as their primary cooking fuel.
Authorities had already implemented restrictions to manage stockpiles. Rural households had to wait up to 45 days to refill their cylinders during the most critical phase. This interval was later reduced to 25 days as supply improved and backorders decreased.
However, the recovery in demand varies across sectors. Total consumption during the holiday season could remain around 10% below the same period last year, mainly due to weak industrial demand.
Thus, refineries face two simultaneous needs: ensuring sufficient LPG for households and reducing vulnerability to external disruptions. If residential consumption increases during the holidays and winter, domestic production could remain high while India continues to reorganize its supply sources.
Sources: Oil Price
Photo: Shutterstock
