Government Invokes Emergency Powers to Increase LPG Production Amid Supply Risks
The Indian government has invoked emergency provisions under the Essential Commodities Act, 1955, directing oil refineries to boost Liquefied Petroleum Gas (LPG) production. The directive aims to ensure stable domestic cooking gas supply amid concerns about possible disruptions in global energy supply routes due to geopolitical tensions in West Asia. Refineries have been asked to maximise LPG output, prioritise supply to public oil marketing companies, and avoid diverting propane and butane for petrochemical use. India is also expanding LPG import sources, including a new supply arrangement from the US Gulf Coast.
Government Issues Directive to Safeguard LPG Supply
The Indian government has activated emergency provisions under the Essential Commodities Act, 1955, instructing refineries across the country to increase the production of Liquefied Petroleum Gas (LPG).
The directive, issued by the Ministry of Petroleum and Natural Gas on March 5, 2026, is intended to ensure uninterrupted availability of cooking gas for households.
The decision comes as authorities monitor potential risks to global energy supply chains caused by rising geopolitical tensions in West Asia, which could affect LPG shipments to India.
Refineries Asked to Maximise LPG Production
Under the government order, both public and private sector refineries have been directed to maximise LPG output by fully utilising available propane and butane streams.
These components are key feedstocks used during refining operations and can be converted into LPG. By increasing the conversion of these streams, the government aims to maintain stable domestic supply even if global shipments face temporary disruptions.
India’s Growing Dependence on Imported LPG
India remains heavily reliant on imports to meet its cooking gas demand.
According to government data:
- Total LPG consumption reached around 31.3 million tonnes in FY25
- Domestic LPG production stood at approximately 12.8 million tonnes
This means that over 60% of India’s LPG demand is met through imports.
A large portion of these imports originates from the Middle East, with nearly 85–90% of shipments passing through the Strait of Hormuz, a strategically important maritime route that is highly sensitive to geopolitical tensions.
Priority Supply to Public Oil Marketing Companies
As part of the directive, refineries have been instructed to prioritise LPG supply to India’s three major public sector oil marketing companies:
- Indian Oil Corporation (IOC)
- Bharat Petroleum Corporation Limited (BPCL)
- Hindustan Petroleum Corporation Limited (HPCL)
These companies manage the distribution of LPG cylinders to millions of households under various government schemes and commercial networks.
Restrictions on Petrochemical Use of Propane and Butane
The order also restricts the diversion of propane and butane for petrochemical manufacturing.
Refineries have been instructed to avoid using these feedstocks for producing downstream petrochemical products so that they can be primarily utilised for LPG output.
Industry data indicates that propane and butane are often used in manufacturing petrochemical derivatives such as polypropylene and alkylates. For example, market reports suggest that Reliance Industries exported several alkylate cargoes every month in the previous year.
The new directive ensures that these resources are prioritised for domestic energy security.
India Exploring Alternative Import Sources
Alongside boosting domestic production, the government is working to diversify the country’s LPG import sources.
Public sector oil companies have reportedly signed agreements to import around 2.2 million tonnes of LPG from the US Gulf Coast in 2026.
This volume represents about 10% of India’s annual LPG imports and is part of a broader strategy to reduce dependence on any single region for energy supplies.
Summary
The Indian government has invoked emergency provisions under the Essential Commodities Act, 1955, directing refineries to increase LPG production to safeguard domestic cooking gas supplies. The directive requires refineries to maximise LPG output from propane and butane streams and prioritise deliveries to public oil marketing companies such as Indian Oil, BPCL, and HPCL. Restrictions have also been placed on the use of these feedstocks for petrochemical production. The move comes amid concerns about potential supply disruptions linked to geopolitical tensions in West Asia, while India is also diversifying its LPG imports with new supply arrangements from the US Gulf Coast.
Disclaimer
The information in this article is based on publicly available reports and government announcements. Developments related to energy supply policies and import arrangements may evolve as new decisions or updates are issued by authorities. The content is intended for informational purposes only. The publication does not independently verify third-party claims or assertions mentioned in developments.