Facing supply disruption, govt directs refiners to raise LPG production, halts feedstock supply for petrochemicals

The Centre has invoked the Essential Commodities Act to prioritize household cooking gas over industrial petrochemicals as West Asian supply disruptions leave the country with just 25 days of LPG stock. NewsFacing supply disruption, govt directs refiners to raise LPG production, halts feedstock supply for petrochemicals Rituraj Baruah4 min read6 Mar 2026, 08:45 PM ISTAccording to a report by Crisil Ratings, the majority of the LPG in India is used for household consumption; only 10% is used in industries. Photo: PTISummaryThe Centre has invoked the Essential Commodities Act to prioritize household cooking gas over industrial petrochemicals as West Asian supply disruptions leave the country with just 25 days of LPG stock.New Delhi: Facing supply disruption from West Asia, the Indian government has directed all state-run and private-sector refineries in the country to step up production of domestic cooking gas by diverting feedstock away from the manufacturing of non-essential products, including petrochemicals.Using its powers under the Essential Commodities Act, 1955, the ministry has directed all refiners to supply LPG to the three state-owned refiners – Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, Hindustan Petroleum Corp Ltd – which will in turn supply it only to domestic consumers of cooking gas.The development is significant as India has only about 25 days of LPG stock. Annual demand stands at 33.15 million tonnes, with imports servicing about 75-80% of this. LPG is produced from propane and butane, which are byproducts of crude oil and natural gas processing.Also Read | US-Iran war oil shock unlikely to unsettle India’s inflation outlook“All oil refining companies operating in India shall maximize and ensure that propane and butane streams produced, recovered, fractionated or otherwise available with them are utilized for production of LPG and make it available to the three public-sector OMCs, IOCL, HPCL and BPCL only," read the order dated 5 March.An official said on the condition of anonymity, "Further steps will be taken if required, but as of now the situation in terms of LPG supplies to households is comfortable. We are looking to source LPG from anywhere in the world."India is one of the world’s largest LPG importers and relies heavily on West Asian supplies, mostly from Saudi Arabia, Qatar and UAE, and the current disruption in the region could tighten availability for the country. India's LPG imports in FY25 stood at $12.47 billion. Imports in FY26 had already touched $11.25 billion by January. In FY25. The country produced 12.8 million tonnes of LPG in FY25.The LPG used in India comprises 60% butane and 40% propane. West Asian exports are butane-heavy and thus better suited for India since their LPG is a byproduct of oil processing. In January, India began receiving its first major contracted volumes of LPG from the US under a new long-term agreement expected to cover roughly 10% of the country’s total LPG imports. Unlike Middle Eastern supplies, these US shipments are propane-heavy, as LPG in the United States is primarily produced as a byproduct of natural gas processing rather than crude oil refining.According to a report by Crisil Ratings, the majority of the LPG is used for household consumption; only 10% is used in industries. Cooking gas is thus a politically sensitive subject. Under the Pradhan Mantri Ujjwala Yojana (PMUY), the government provides deposit-free LPG connections and cylinders at subsidized rates to adult women from poor households across the country. Downstream industries that use LPG include ceramics. According to the Crisil report, severe disruptions to the availability of these fuels will force the majority of ceramic plants to operate at drastically lower levels or shut down entirely.Also Read | Mint Quick Edit | Russian oil again? Place energy security above fussy demandsOil huntMeanwhile, India is also exploring new sources of oil, with about 50% of its imports from West Asia choked off with the Strait of Hormuz blockade. India is the fourth-largest refiner in the world with a capacity of around 268 million metric tonnes per annum.US Treasury Secretary Scott Bessent said on Friday that Washington would give Indian refiners a 30-day waiver to purchase Russian oil stranded at sea, offering temporary relief. Taking to X, Bessent said that the stop-gap measure would alleviate pressure caused by Iran’s attempt to hold global energy hostage. Describing India as an essential partner of the US, he said the US also expects New Delhi to ramp up purchases of American oil."To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil. This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea," he said.A second official told Mint that while India has maintained its imports of Russian oil, supply volumes have dropped significantly following US sanctions against Rosneft and LUKOIL, two of Russia's largest oil suppliers. Indian refiners are also evaluati