The government on Friday asked Indian Oil Marketing Companies (OMCs) to ramp up LPG production in the country after supplies were impacted due to the ongoing Israel-Iran war in West Asia.
The war, which has entered its seventh day, has disrupted the movement of cargoes through the vital Strait of Hormuz — a key chokepoint that accounts for nearly 20% of the world’s crude supply. For India, the disruption has not only affected crude shipments but also the supply of cooking gas, as around 85% of LPG imports pass through this route.
To ensure smooth domestic supply, the government also invoked an emergency order issued under powers derived from the Essential Commodities Act, 1955 (popularly called ESMA). The order directs all oil refining companies operating in India to maximise LPG production.
The order says refiners must use all available propane and butane to produce Liquefied Petroleum Gas (LPG) and supply it only to the three public sector oil marketing companies — Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).
It also states that refiners cannot use propane or butane to make petrochemical products or other downstream derivatives, and must prioritise LPG production instead.
“All Public sector OMCs shall ensure that LPG so procured is supplied/marketed solely to consumers of domestic LPG only,” reads the order.
India consumed about 28 million metric tonnes (MMT) of LPG for domestic use between April 2025 and March 2026, marking a 7.8% increase during the period. The country imports nearly 80% of its LPG from Qatar, the UAE, Saudi Arabia and Kuwait. India has also recently signed contracts to import around 2.2 million tonnes per annum (MTPA) of LPG from the United States — nearly 10% of its total annual LPG imports. According to the government, supplies under these contracts started in January 2026.
India currently has 33.08 crore active LPG consumers.
Meanwhile, officials said the government is in talks with suppliers globally to ensure that domestic supplies are not affected. However, experts believe production cannot be ramped up significantly enough to fully compensate for LPG imports.
Analysts say domestic refineries can be pushed to maximise LPG yields, but the incremental output may cover only one or two additional Very Large Gas Carrier (VLGC) cargoes per month. India can also draw upon its underground LPG storage cavern at Mangalore, which offers some short-term buffering capability.
However, given India’s structural dependence on Middle Eastern LPG and limited near-term supply flexibility, the overall LPG supply situation remains worrisome in the event of prolonged disruption.