What Happened
- Bharat Petroleum Corporation Limited (BPCL) is in talks with the State Oil Company of Azerbaijan Republic (SOCAR) for LPG procurement, confirmed by T.V. Pandiyan, head of BPCL's LPG division.
- BPCL has also announced a tender for importing LPG from the United States under a spot purchasing mechanism, complementing its predominantly long-term contract structure (approximately 90% of purchases are under long-term contracts).
- India has separately finalised its first-ever major structured contract to import LPG from the US, with public sector oil companies signing a one-year agreement for approximately 2.2 million tonnes per annum (MTPA) from the US Gulf Coast for 2026.
- The initiative is part of India's broader strategy to diversify LPG supply sources away from heavy dependence on the Middle East, which accounted for 91-93% of India's total LPG imports in FY 2024-25.
- India aims to source approximately 10% of its cooking gas imports from the US beginning in 2026.
Static Topic Bridges
India's LPG Import Dependence and Supply Geography
India is the world's second-largest consumer of LPG, with consumption growing from 21.6 million tonnes in FY 2017 to 31.3 million tonnes in FY 2025, driven largely by the Pradhan Mantri Ujjwala Yojana (PMUY) which expanded rural household access. Domestic production meets only about half the demand, necessitating large-scale imports concentrated heavily from the Middle East.
- LPG consumption (FY 2025): 31.3 million tonnes; projected FY 2026: 33-34 MT
- Import sources (FY 2025): UAE 41%, Qatar 22%, Saudi Arabia 15%, Kuwait 15% (Middle East total: 91-93%)
- In 2024, India imported: 8.1 MT from UAE, 5 MT from Qatar, 3.4 MT from Kuwait, 3.3 MT from Saudi Arabia
- Pradhan Mantri Ujjwala Yojana (PMUY): launched 2016, provided 10.35 crore LPG connections to BPL households
- India's three major oil marketing companies (OMCs): IndianOil (IOCL), BPCL, HPCL
- LPG subsidy transferred via Direct Benefit Transfer (DBT) to Aadhaar-linked bank accounts
Connection to this news: BPCL's engagement with Azerbaijan's SOCAR and US suppliers directly addresses the concentration risk of sourcing over 90% of LPG from the Middle East. The diversification push gained urgency after geopolitical tensions in the Middle East highlighted supply vulnerability.
Energy Diversification as a Strategic Imperative for India
India's energy security strategy explicitly prioritises supplier diversification across all hydrocarbon imports (crude oil, natural gas, LPG, coal). India imports approximately 85% of its crude oil and about 50% of its natural gas requirements. The International Energy Agency (IEA) and India's own Integrated Energy Policy recommend reducing concentration risk by expanding the supplier base.
- India's crude oil import dependence: approximately 85%
- Natural gas import dependence: approximately 50%
- India's energy import bill (FY 2024-25): approximately $170-180 billion
- Key diversification initiatives: US crude oil imports (started 2017), Russia crude oil (increased significantly since 2022), LNG contracts with Qatar, US, Australia, and Mozambique
- BPCL also signed an annual contract with Norway's Equinor for 550,000 tonnes per annum of propane and butane
- India's Strategic Petroleum Reserves (SPR): 5.33 million tonnes at Visakhapatnam, Mangaluru, and Padur
Connection to this news: The BPCL-SOCAR talks and US LPG procurement tender represent the latest steps in India's systematic effort to reduce dependence on any single region. Adding Azerbaijan (Caspian region) and the US (Gulf Coast) as LPG sources creates multiple supply corridors, reducing vulnerability to regional disruptions.
India-Azerbaijan Bilateral Relations and Energy Cooperation
India and Azerbaijan have developed bilateral relations centred on energy cooperation, with ONGC Videsh Limited (OVL) investing over $1.2 billion in Azerbaijan's energy sector through stakes in the Azeri-Chirag-Gunashli (ACG) oil field and the Baku-Tbilisi-Ceyhan (BTC) pipeline. GAIL has signed a memorandum of understanding with SOCAR for petrochemical cooperation.
- ONGC Videsh investment in Azerbaijan: over $1.2 billion (ACG oil field and BTC pipeline stakes)
- GAIL-SOCAR MoU: covers petrochemical project cooperation
- Azerbaijan's geographic significance: on the Caspian Sea, links to Southern Gas Corridor to Europe
- SOCAR is Azerbaijan's national oil company, controlling most of the country's oil and gas operations
- India-Azerbaijan bilateral trade: relatively small but growing, approximately $1-2 billion
- Both countries are members of the Non-Aligned Movement
Connection to this news: BPCL's LPG procurement talks with SOCAR represent an expansion of the existing India-Azerbaijan energy partnership beyond upstream investment (ONGC Videsh) and petrochemicals (GAIL) into direct commodity trade in LPG, deepening the bilateral energy relationship.
Key Facts & Data
- India's LPG consumption (FY 2025): 31.3 million tonnes; projected FY 2026: 33-34 MT
- Middle East share of India's LPG imports (FY 2025): 91-93% (UAE 41%, Qatar 22%, Saudi Arabia 15%, Kuwait 15%)
- India-US LPG deal: 2.2 MTPA for one year from US Gulf Coast (2026)
- Target US share of India's LPG imports: approximately 10% beginning 2026
- BPCL procurement structure: 90% long-term contracts, 10% spot purchases
- ONGC Videsh investment in Azerbaijan: over $1.2 billion
- PMUY connections: 10.35 crore LPG connections to BPL households since 2016
- India's crude oil import dependence: approximately 85%