India orders refiners to maximise cooking gas production amid Middle East supply disruptions, prioritising households over petrochemicals.
NEW DELHI: India has invoked emergency powers to direct its oil refiners to maximise production of liquefied petroleum gas. The move aims to prevent a shortage of the essential cooking fuel following supply disruptions linked to the Middle East crisis.
A government order issued late on Thursday instructed all refiners to ensure available propane and butane are utilised for LPG production. The directive mandates that producers make these components available to state-owned refiners for household distribution.
India is the world’s second-largest importer of LPG, consuming 33.15 million metric tons last year. Imports satisfy about two-thirds of the country’s total consumption, with 85% to 90% of that supply originating from the Middle East.
The order specifically prohibits refiners from diverting propane and butane for petrochemical production. This mandatory diversion will curtail output of other products, including alkylates, a key gasoline blending component.
Reliance Industries Ltd, which exported about four cargoes of alkylates per month last year, will be affected. A trade source said diverting feedstocks to LPG will hurt petrochemical margins, as products like polypropylene and alkylates typically fetch better prices.
The government’s priority is securing supply for India’s 332 million active LPG consumers. The state refiners tasked with distribution are Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp.
