India’s state-owned oil refiners are planning to increase their purchases of liquefied petroleum gas (LPG) from the US next year as the country looks to diversify its energy supplies amid disruptions in the Persian Gulf.
Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation are seeking up to five 46,000-tonne LPG cargoes a month from the US under annual contracts for 2027. This would be higher than the four cargoes a month secured under their 2026 contracts, according to people familiar with the tender.
The shipments are expected to contain equal quantities of propane and butane.
US LPG volumes set to rise
If the proposed contracts are finalized, India’s contracted LPG purchases from the US could increase to around 2.76 million tonnes in 2027 from about 2.2 million tonnes this year.
India, the world’s second-largest LPG importer, entered into its first long-term supply agreements with US producers this year. The latest move would further expand the role of American suppliers in India’s LPG market.
The government has asked the three state-owned refiners to raise the share of India’s LPG imports secured through US term contracts to at least 15% in 2027, compared with around 10% this year.
Diversifying beyond the Middle East
The increase in US purchases comes as India seeks to reduce its dependence on Middle Eastern LPG supplies.
Before disruptions linked to the US-Iran conflict affected shipping through the Strait of Hormuz, more than 90% of India’s LPG imports came from the Middle East. The disruption led to supply concerns and shortages in parts of the country.
Increasing imports from the US would give Indian refiners another major source of LPG while reducing exposure to disruptions in the Gulf region.
US becomes India’s top LPG supplier
The US has already emerged as India’s largest supplier of LPG. Shipments, including spot cargoes, reached a record 3.9 million tonnes through August.
The higher annual contracts could strengthen this supply relationship further while also supporting India’s broader efforts to increase energy trade with the US.
The move comes as India and the US continue discussions on a broader trade agreement. Higher purchases of American energy products could also help India address trade-related concerns as negotiations progress.
