Gulf crisis: Government invokes special powers, asks refiners to boost LPG output

NEW DELHI: Invoking its emergency powers, the government directed oil refiners late on Thursday to increase production of cooking gas and ensure there is no shortage of LPG for domestic customers due to supply constraints arising from the ongoing military conflict in West Asia.

India imports over 60% of its domestic LPG requirement, and nearly 85-90% of these imports pass through the Strait of Hormuz, which is currently disrupted, making supplies vulnerable. In 2024-25, India consumed 31.3 million tonnes of LPG, of which only 12.8 million tonnes were produced domestically.




Since India has surplus oil refining capacity, officials said all public and private oil refineries have been directed to maximise production of LPG from propane and butane streams produced, recovered, fractionated or otherwise available with them. LPG is a mixture of propane and butane.

The order issued by ministry of petroleum and natural gas on March 5, under powers derived from Essential Commodities Act, 1955, stated that these streams must be utilised for LPG production and supplied only to the three public sector oil marketing companies - Bharat Petroleum, Indian Oil and Hindustan Petroleum.

The order also barred refiners from using the two chemicals for producing petrochemicals. "All oil refining companies shall not divert, utilise, process, crack, convert or otherwise employ propane or butane stream for the manufacture of petrochemical products or other downstream derivatives," it stated.

The additional LPG procured by OMCs is to be sold only to domestic households for cooking purposes, and any contravention will attract penal action, as per the order.

Officials said the step has been taken to ensure uninterrupted cooking gas supply to nearly 33.1 crore active LPG consumers.

Apart from ramping up domestic production, the government is scouting for LPG supplies from geographies outside the conflict zone. Officials said India recently signed an LPG import contract with the US and cargoes have started arriving. Public sector oil companies will import 2.2 million tonnes of LPG from the US Gulf Coast in 2026 - roughly 10% of the country's annual LPG imports - in a move to diversify energy sources and bolster energy security.

Officials also noted that gas companies are re-prioritising natural gas supplies to ensure that critical sectors such as automobile fuel, household kitchens, and fertiliser industries continue to receive uninterrupted supply.

India currently consumes about 195 million metric standard cubic metres per day of natural gas, used as auto and kitchen fuel as well as feedstock for fertiliser, power and other industries. More than 50% of this requirement is met through imports.

Since Qatar, the main supplier, has shut its LNG production facility and shipment movement through the Strait of Hormuz is blocked, about 60 million metric standard cubic metres per day of supplies are currently unavailable, forcing companies to source gas from elsewhere. "A company bought a cargo (shipload of LNG) just yesterday," an official said.