The Indian government has invoked emergency provisions under the Essential Commodities Act, 1955, directing oil refineries across the country to increase the production of Liquefied Petroleum Gas (LPG). The directive was issued by the Ministry of Petroleum and Natural Gas on March 5, 2026, as part of precautionary measures to safeguard domestic cooking gas supplies.
The move comes amid rising concerns over potential disruptions in global energy supply chains linked to geopolitical tensions in West Asia, which could affect LPG shipments to India.
Refineries Asked to Maximise LPG Output
Under the directive, refining companies have been instructed to maximise LPG production by utilising available propane and butane streams. The order applies to both public and private sector refineries operating in India.
Authorities aim to ensure that household LPG supply remains stable even if international supply routes face disruptions.
Heavy Dependence on Imported LPG
India remains significantly dependent on imports to meet its LPG demand. Government data indicates that LPG consumption reached around 31.3 million tonnes in FY25, while domestic production stood at approximately 12.8 million tonnes.
This means over 60% of India’s LPG requirement is met through imports. A large share of these shipments originates from Middle Eastern countries, with nearly 85–90% of cargo passing through the strategically important Strait of Hormuz.
Supply Priority for Public Oil Marketing Companies
Refineries have also been instructed to prioritise the supply of LPG to the country’s major public sector oil marketing companies:
- Indian Oil Corporation
- Bharat Petroleum Corporation
- Hindustan Petroleum Corporation
These companies are responsible for distributing LPG to millions of households across India.
Restrictions on Petrochemical Use
The government order also places restrictions on the use of propane and butane for petrochemical manufacturing. Refiners have been directed not to divert these streams for petrochemical or other downstream products, ensuring that they are primarily utilised for LPG production.
Industry data suggests that propane and butane are commonly used to produce petrochemical derivatives such as polypropylene and alkylates. For instance, Reliance Industries reportedly exported around four cargoes of alkylates each month in the previous year, according to market data.
Efforts to Diversify LPG Supply Sources
In addition to boosting domestic production, the government is exploring alternative sources of LPG imports to reduce reliance on regions affected by geopolitical tensions.
Public sector oil companies have signed an agreement to import around 2.2 million tonnes of LPG from the US Gulf Coast in 2026. This volume accounts for roughly 10% of India’s annual LPG imports and forms part of a broader strategy to diversify supply sources.
Summary:
The Indian government has invoked emergency powers under the Essential Commodities Act, 1955 to direct refineries to increase LPG production using available propane and butane. The move, issued by the Ministry of Petroleum and Natural Gas on March 5, 2026, aims to protect household cooking gas supplies amid potential disruptions linked to West Asia tensions. Refineries must prioritise LPG supply to Indian Oil, BPCL, and HPCL, while restricting the use of feedstock for petrochemical production. Meanwhile, India is also diversifying LPG imports, including a planned 2.2 million tonne supply contract from the US Gulf Coast in 2026.
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