State-run refiners have ramped up purchases from the US and now must draft a plan exploring all possible storage options, writes Rituparna Ghosh
The Indian government has directed state-controlled refiners to establish an LPG storage reserve covering 30 days of demand as shipping disruptions continue to restrict imports from the Middle East, according to petroleum ministry joint secretary Sujata Sharma.
The reserve is likely to require the three refiners, which control the domestic LPG market, to ramp up imports from non-Middle Eastern sources having already pivoted to cargoes from the US on top of existing term contracts. The ministry has asked the refiners to draft a plan exploring all possible storage options, including floating storage. The volume required under the 30-day reserve has not been disclosed but it is likely to be around 2.8mn t based on LPG consumption of about 92,000 t/d, oil ministry data show.
The refiners — IOC, BPCL and HPCL — typically store LPG at their import terminals, with combined capacity of around 1mn t and emergency stocks only expected to last as little as 10 days, market participants said just after the Iran war started. The government does not provide data on domestic LPG inventories.
The refiners have ramped up spot purchases from the US and deployed time-chartered vessels to the US Gulf coast, some of which transited the strait of Hormuz in April. This is on top of term deals for 2.2mn t of US LPG imports in 2026.
India's LPG imports fell to 1.2mn t in May, nearly half of the country's average intake of closer to 2mn t/month prior to the Iran war, Kpler data show. Domestic LPG production from refineries rose to a record high of 52,000 t/day in May from 50,000 t/d in April, Sharma says, as refineries optimised LPG yields as well as diverting any used as a petrochemical feedstock back to the domestic market. But India's LPG demand is shrinking, dropping by 22pc on the month in March and 8pc in April to less than 2.2mn t as the country continues to grapple with supply shortages.
