India’s LPG production surges to nearly 60%, marking an important change to how energy security will impact the country from an energy supplies perspective. With instability of geo-political situations occurring in the Middle East and affecting world fuel markets, the Ministry of Petroleum’s data shows that the domestic production of LPG increased from approximately 40% to approx 60% due to enhanced refinery optimization and an aggressive policy environment.

Why has India’s Production of LPG Experienced Such a Rapid Rise?

• Optimization at the refinery level: India’s refineries were mandated to operate at optimal efficiency levels and produce more LPG, even if that meant producing fewer petrochemicals. This was an effective strategy that contributed to a rapid increase in the domestic availability of LPG.
• Disruption of supply chain from West Asia: Starting on February 28, the disruptions resulted in the shutdown of important sea routes such as the Strait of Hormuz and affected crucial installations such as Ras Laffan in Qatar, which drastically reduced imports and compelled India to ramp up its production of LPG.
• High dependence on imports: Even before the current situation arose, India relied heavily on imports to meet almost 60% of its LPG requirements, a large portion of which was supplied by Qatar.
• Lower consumption helping out: LPG consumption fell by 26.6% from 3.012 million tonnes in January and 2.822 MT in February to 2.379 MT in March.

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How has the Government Managed with the LPG Shortage Situation?

• Household priority: The Indian government made sure that LPG reached more than 332 million households without any interruption.
• Commercial use restrictions: Temporary curtailment of supplies for commercial and industrial purposes ensured that domestic requirements were met.
• Increased import options: To offset limited supplies from West Asia, India increased imports from countries such as the United States and Australia.
• Inventory management: It was assured that India’s oil stocks are enough and that refineries are working well.

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Global Geopolitics and Partnerships Impact LPG Supply Stability

In particular, West Asia is still the dominant source of supply, and disruptions such as the blockade of the Strait of Hormuz are capable of creating major disruptions to the LPG supply chain. However, through diplomatic engagement with Qatar, the supply situation has been stabilized as they reaffirmed their commitment to being a long-term energy partner and continuing their long-term supply agreement with India. Additionally, a recent temporary ceasefire in the region has improved prospects for continued import flows for India.

India’s LPG production surges to nearly 60%, thereby enhancing its energy security during these times of global uncertainty. Although the majority of that increase has been a result of emergency measures, it also shows the need for structural change over the long term, as well as developing diversified sourcing and growing domestic capacity.

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