India Orders Refiners to Boost LPG Production Amid Crisis

The government of India has invoked emergency powers to direct domestic refiners to maximize the production of liquefied petroleum gas (LPG). This move is intended to prevent potential shortages of cooking fuel following supply disruptions linked to the ongoing crisis in the Middle East. As the world's second-largest importer of LPG, the nation consumed 33.15 million metric tons of the fuel last year, which consists of a mixture of propane and butane. Imports currently account for approximately two-thirds of the country's total LPG consumption, with the Middle East providing between 85% and 90% of those imports. To secure domestic supply for its 332 million active consumers, the government issued a directive late Thursday requiring all producers to prioritize household distribution. > All oil refiners are asked to maximise and ensure that propane and butane available with them are utilized for production of LPG. Under the new mandate, producers must ensure that LPG, propane, and butane are made available to state-run refiners, including Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, and Bharat Petroleum Corporation Limited. Furthermore, the government has prohibited refiners from diverting these gases toward petrochemical production. The mandatory shift is expected to impact the operations of RELIANCE INDUSTRIES LTD, as the diversion of propane and butane will likely curtail the production of alkylates, a key component used in gasoline blending. Data indicates that the company exported roughly four cargoes of alkylates per month over the past year. Trade sources noted that the order could hurt profit margins for petrochemical firms that produce polypropylene and alkylates, as those products typically command higher market prices than LPG.