India Ramps Up Domestic LPG Production Amid Middle East Tensions

13 Mar 2026 CW Team

Companies have been instructed to make supplies available to state-run oil marketing companies Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation and not to divert propane or butane to petrochemical production or other downstream derivatives. The direction is intended to preserve household cooking gas availability as geopolitical instability tightens global energy supply chains. Authorities have emphasised that refinery feedstock allocation must support domestic distribution.

India uses around 33.15 million (mn) metric tonnes annually of LPG, with imports accounting for roughly two-thirds of total demand and 85 to 90 per cent of those imports coming from the Middle East, making the country particularly sensitive to regional disruptions. India currently has more than 330 million (mn) LPG consumers who depend on the fuel for cooking. Officials view the directive as part of a broader effort by policymakers to shield the domestic market from global volatility and to ensure uninterrupted supply.

The central directive forms part of contingency planning to maintain stable household supplies while global tensions persist and to manage refinery utilisation and distribution. Industry participants are likely to need short-term adjustments in refinery operations and feedstock allocations to meet the mandate. The ministry will monitor refinery utilisation and domestic distribution to ensure supplies reach state marketing companies and end users.

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India has directed refineries to increase production of liquefied petroleum gas to secure domestic supplies amid concerns that the Iran–Israel conflict could disrupt global energy flows through the Strait of Hormuz. The Ministry of Petroleum and Natural Gas issued an order requiring refiners to maximise use of propane and butane streams for LPG production and to prioritise domestic output. The Strait of Hormuz is a critical shipping route for energy shipments to Asia, heightening concern about potential supply interruptions. Companies have been instructed to make supplies available to state-run oil marketing companies Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation and not to divert propane or butane to petrochemical production or other downstream derivatives. The direction is intended to preserve household cooking gas availability as geopolitical instability tightens global energy supply chains. Authorities have emphasised that refinery feedstock allocation must support domestic distribution. India uses around 33.15 million (mn) metric tonnes annually of LPG, with imports accounting for roughly two-thirds of total demand and 85 to 90 per cent of those imports coming from the Middle East, making the country particularly sensitive to regional disruptions. India currently has more than 330 million (mn) LPG consumers who depend on the fuel for cooking. Officials view the directive as part of a broader effort by policymakers to shield the domestic market from global volatility and to ensure uninterrupted supply. The central directive forms part of contingency planning to maintain stable household supplies while global tensions persist and to manage refinery utilisation and distribution. Industry participants are likely to need short-term adjustments in refinery operations and feedstock allocations to meet the mandate. The ministry will monitor refinery utilisation and domestic distribution to ensure supplies reach state marketing companies and end users.

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