India is strategically boosting its domestic production of cooking gas to mitigate vulnerabilities stemming from geopolitical instability in the Middle East. With the Strait of Hormuz crisis creating prolonged uncertainty, the nation, which imports approximately 90% of its liquefied petroleum gas (LPG) through this critical maritime choke point, is taking proactive measures to enhance energy security.
Government directives issued on August 13 have mandated both state-owned enterprises and private refining companies to significantly ramp up their LPG output. This comprehensive order requires them to implement all technically and economically viable strategies to maximize production beyond current minimum levels. A key aspect of this mandate includes exploring alternative uses for existing feedstocks, such as converting naphtha into LPG, thereby diversifying the sources for cooking gas.
India’s substantial reliance on imports, accounting for roughly two-thirds of its total LPG consumption, has been a persistent challenge, particularly exacerbated by disruptions linked to the US-Iran conflict. This conflict has necessitated a pivot in sourcing, with buyers increasingly turning to suppliers in the United States and newer markets like Algeria, following the disruption of traditional supply routes.
Prior to these geopolitical tensions, domestic refiners collectively produced approximately 36,000 tons of LPG daily. In response to the escalating situation, they have already increased this to around 54,000 tons per day. The government’s ambitious new target, as outlined in the notification, aims for the industry to achieve a daily output of 63,810 tons. This target includes specific allocations for individual refiners, with Reliance Industries Ltd.’s domestic-focused unit assigned the largest share at 18,000 tons per day.
Beyond private players, state-run exploration companies such as Oil and Natural Gas Corp. and Oil India Ltd., alongside the national gas pipeline utility Gail India Ltd., are also expected to contribute a significant portion, approximately a tenth, towards this nationwide production goal. Historically, India had leaned towards importing LPG rather than prioritizing domestic production, largely because it was considered less profitable compared to gasoline and petrochemical feedstocks.
In addition to increasing production, refiners have been instructed to expand the necessary infrastructure for LPG storage, evacuation, and transportation. These companies are now required to meet their enhanced production targets within stipulated timelines. The government plans to conduct regular reviews of these output targets every January and July, ensuring consistent progress and adaptability in its quest for energy independence and enhanced India news regarding energy policy.
