India Signs First Structured Term Deal for US LPG Imports

Indian public sector refiners have signed a one-year structured contract to import American liquefied petroleum gas (LPG). This marks the first-ever term deal for US LPG specifically meant for India’s domestic market.

Import Volume and Market Share

• The agreement covers 2.2 million tonnes per annum (MTPA) of LPG.
• This represents nearly 10% of India’s annual LPG imports.

Shift in Supplier Base

• India traditionally imports LPG from:
  • Saudi Arabia
  • United Arab Emirates
  • Qatar
  • Kuwait
• The new deal with the United States is expected to reduce dependence on West Asian suppliers, enabling:
  • Diversification of import sources
  • Greater price competitiveness

Domestic LPG Consumption and Subsidy

• LPG is chiefly used as a cooking fuel across Indian households.
• A large part of LPG sold to households is subsidised by the government.
• Over recent years, the government has:
  • Expanded LPG coverage, especially among poor and rural households.
  • Aimed to reduce reliance on traditional, polluting fuels such as firewood and kerosene.

India’s Broader Energy Dependence

• India is the world’s third-largest consumer of crude oil.
• Crude oil import dependency is around 88%.
• India is also a major importer of liquefied natural gas (LNG):
  • Around 50% of India’s natural gas demand is met through imports.
• Energy trade with the United States:
  • US is the fifth-largest supplier of crude oil to India in recent years.
  • US is the second-largest supplier of LNG to India.

Current LPG Import Scenario

• Over 60% of India’s LPG requirement is sourced from imports.
• The new US deal helps:
  • Strengthen energy security
  • Reduce supply concentration
  • Provide a stable, long-term import channel