India Boosts LPG Production Ahead of Festival Season

India, Sep 24 : India has increased domestic liquefied petroleum gas (LPG) production as demand for cooking fuel rises during the festive season, while renewed fighting in the Persian Gulf continues to create uncertainty over supplies from the region.

State owned refiners are currently producing around 44,000 tonnes of LPG a day, nearly 20 per cent higher than the average recorded in August, according to people familiar with the matter. The increase comes after refiners had reduced output from wartime levels when alternative shipments from the US and Africa began reaching India.

India, the world’s second-largest LPG importer, has traditionally relied heavily on supplies from the Persian Gulf. The disruption caused by the conflict has encouraged the country to strengthen domestic production and diversify its import sources.

The latest increase in output also coincides with a recovery in household demand. The government last month reduced the mandatory waiting period for rural consumers to refill LPG cylinders to 25 days from the emergency 45-day limit introduced in March. Officials cited improved availability and reduced backlogs behind the change.

Demand is expected to remain strong through the Hindu festive season, which will continue until Diwali in November. However, overall consumption is projected to stay around 10 per cent below the corresponding period last year, partly because industrial demand has not fully recovered after the war. During the conflict, supplies were prioritised for households.

Winter conditions could further increase household consumption, potentially prompting refiners to raise domestic LPG production again.

Meanwhile, renewed fighting has disrupted some shipments from the Persian Gulf. One September cargo intended for Bharat Petroleum Corp. and two for Indian Oil Corp., all scheduled from Abu Dhabi National Oil Co. (ADNOC), could not be collected, according to the people familiar with the matter.

ADNOC has indicated that it plans to fulfil its October commitments, including five cargoes for Indian Oil and three each for Bharat Petroleum and Hindustan Petroleum Corp. The company said it remains committed to meeting Indian customers’ requirements and supporting the country’s energy security.

Indian state refiners are also considering further diversification of their supply sources. They may issue a tender this month for long-term LPG supplies from the US, potentially covering up to 20 per cent of India’s imports next year.

The US supplied about 6 per cent of India’s LPG imports last year, but its share has since risen above 20 per cent, making it the country’s largest supplier. India signed its first long-term LPG supply agreement with the US last year as part of efforts to reduce dependence on Middle Eastern supplies.

The planned procurement could further increase the US role in India’s LPG market as uncertainty surrounding Persian Gulf shipments continues.