India has sealed its first structured liquefied petroleum gas (LPG) supply agreement with the United States—an important step in strengthening the country’s energy security and diversifying its fuel sourcing strategy. The announcement was made by Union Petroleum and Natural Gas Minister Hardeep Singh Puri, who called the development a “historic first” for the Indian LPG market, one of the fastest-growing in the world.
In a post on X, Puri highlighted that India is opening its LPG market to the US as part of its push to secure affordable and reliable supplies for consumers.
Deal Covers Nearly 10% of India’s LPG Imports for 2026
Under the agreement, India’s three state-owned oil marketing companies—Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)—will jointly import 2.2 million tonnes per annum (MTPA) of LPG during the contract year 2026.
This volume represents almost 10% of India’s annual LPG import requirement, making it the country’s first large-scale, structured contract for US-sourced LPG.
The pricing framework for the purchase is linked to the Mont Belvieu benchmark, a widely used global price reference for LPG. Puri noted that teams from the three OMCs had been in discussions with major US suppliers over recent months, culminating in this strategic agreement.
Government Absorbed Price Shock to Protect Consumers
Puri also highlighted the Centre’s efforts to shield households—particularly beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY)—from global price spikes.
Despite international LPG prices rising by more than 60% last year, the government ensured that Ujjwala consumers continued to receive cylinders at ₹500–₹550, while the actual market price exceeded ₹1,100. The government spent over ₹40,000 crore in subsidies to soften the impact of inflation and maintain affordability.
Strengthening Energy Security Through Diversification
The deal with the US underscores India’s strategy to diversify supply sources, reduce vulnerability to market disruptions, and secure stable long-term access to essential fuels. As LPG consumption continues to expand across households and industries, structured contracts are expected to play a crucial role in balancing affordability and availability.
Summary
- India has signed its first structured LPG import contract with the US, covering 2.2 MTPA for 2026.
- This volume accounts for about 10% of India’s annual LPG import requirement.
- Pricing will be based on the Mont Belvieu benchmark.
- The Indian government absorbed heavy price increases last year, spending ₹40,000 crore on subsidies to keep LPG affordable for Ujjwala beneficiaries.
- The deal enhances India’s energy security and diversifies its LPG sourcing portfolio.
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