India Strikes First-Ever LPG Deal With US, Will Source 10% of Annual Imports

The Indian government claims that this step will increase the nation's energy security and diversify its supply sources during a period of increasing global volatility by signing its first structured, long-term deal to import liquefied petroleum gas (LPG) from the United States.

State-run oil companies have concluded a one-year agreement to import about 2.2 million tonnes per annum (MTPA) of LPG from the US Gulf Coast for the contract year 2026, according to a statement made by Union Petroleum and Natural Gas Minister Hardeep Singh Puri on 17 November. This amount signifies a significant change in India's sourcing strategy, as it accounts for almost 10% of the nation's yearly LPG imports.

India World’s Second Largest LPG Consumer

Rapid household adoption and the ongoing growth of the Ujjwala Yojana, which offers low-income households subsidised LPG connections, have made India the world's second-largest user of LPG. India currently imports more than half of its LPG needs, with West Asian markets providing the majority of the supply.

New Delhi's aim to lessen reliance on conventional suppliers, increase supply stability, and protect against abrupt price increases in the global market includes the decision to source a sizable amount from the US. One of the fastest-growing LPG markets in the world is now formally opening up to US supplies, Puri added, calling this a historic first. Puri continued by saying that India has been expanding its sourcing in an effort to supply the nation's citizens with safe and reasonably priced LPG. This agreement is a big step in that direction.

Ujjwala Benefits Continue Despite Global LPG Price Volatility

Puri emphasised how the government made sure Ujjwala recipients remained paying only INR 500–550 per cylinder, even though actual expenses reached INR 1,100, even though worldwide LPG prices increased by more than 60% last year. He said that in order to protect consumers from the price shock, the government took up the remaining expense and spent more than INR 40,000 crore. In order to provide Indian families with "secure, affordable, and reliable LPG supplies", the minister referred to the US agreement as an additional step.

The deal may open the door for future longer-term supply agreements and is anticipated to strengthen India-US energy cooperation. Diversifying sourcing away from a single region lowers supply-chain risk and increases pricing stability for Indian oil marketing organisations. Further diversification of supply sources will continue to be a top goal, according to the government, as the LPG market in India continues to grow, especially in rural areas.