India Ramps Up LPG Production Amid Middle East Crisis

In response to supply disruptions due to the Middle East crisis, India has utilized emergency powers to boost LPG production. This move ensures uninterrupted access to cooking gas, securing household needs. The government's directive affects refiners, impacting propane and butane allocations while affecting petrochemical margins.

India has activated emergency powers, mandating refiners to increase liquefied petroleum gas (LPG) production as a proactive measure against potential shortages triggered by the Middle East supply disruptions, according to a government order.

The country, which was the world's second-largest importer of LPG last year, consuming 33.15 million metric tons, predominantly relies on imports with 85-90% of its supply coming from the Middle East. The latest directive instructs all oil refiners to 'maximize and ensure that propane and butane available with them are utilized for LPG production,' the order detailed.

Producers have also been instructed to prioritize LPG, propane, and butane supply to state refiners, such as Indian Oil Corp, Hindustan Petroleum Corp, and Bharat Petroleum Corp, for distribution to approximately 332 million active consumers. The order restricts propane and butane usage for petrochemical production, affecting margins for companies like Reliance Industries Ltd., which had previously exported significant alkylate volumes.

(With inputs from agencies.)