What Happened
- India is facing an acute LPG (liquefied petroleum gas / cooking gas) supply squeeze, primarily because of disruptions to the Strait of Hormuz, through which roughly 90% of India's LPG imports flow.
- The Ministry of Petroleum and Natural Gas issued a Control Order on March 8, 2026, directing all oil refineries to maximise LPG yields and channel the entire output of C3-C4 hydrocarbon streams (propane, butane, propylene, butenes) exclusively to three Oil Marketing Companies (OMCs) for domestic use.
- Indian refiners responded by increasing domestic LPG production by 25–30% within seven days of the order, with some estimates indicating production increased by up to 30%.
- The government also secured 20 Very Large Gas Carriers (VLGCs) to transport LPG from alternative sources, including a 2.2 million tonne per annum deal for US LPG.
- Two Indian-flagged LPG carriers successfully transited the Strait of Hormuz in mid-March 2026, but that cargo represented only about 5% of India's monthly import requirement.
Static Topic Bridges
India's Energy Security Architecture and Import Dependence
Energy security refers to the uninterrupted availability of energy sources at an affordable price. India imports approximately 60% of its LPG requirements, with over 90% of those imports routed through the Strait of Hormuz — a narrow waterway between Iran and Oman and a global chokepoint. India's domestic LPG production is approximately 12.79 million tonnes annually against total consumption of about 31.32 million tonnes (2024-25), leaving a structural import gap. Energy security is listed under GS Paper 3 (Infrastructure: Energy, Ports, Roads, Airports, Railways), and questions frequently probe India's dependence on Gulf imports, strategic petroleum reserves, and pipeline connectivity.
- LPG domestic production: ~12.79 MT/year (approx. 40% of consumption)
- LPG total consumption: ~31.32 MT/year (2024-25)
- Import dependence: ~60% of consumption; ~90% of imports transit the Strait of Hormuz
- Monthly LPG consumption: approximately 2,700 thousand metric tonnes (TMT)
- Domestic production monthly: approximately 1,036 TMT
- Strategic petroleum reserve sites: Visakhapatnam, Mangaluru, and Padur (for crude oil); underground LPG storage at Mangaluru and Visakhapatnam being fast-tracked
Connection to this news: The crisis illustrates the acute vulnerability created by India's structural dependence on Gulf LPG imports via a single chokepoint.
Role of Oil Marketing Companies (OMCs) and Domestic LPG Pricing
Three public sector Oil Marketing Companies — Indian Oil Corporation (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) — are responsible for procuring, storing, and distributing LPG to consumers. Domestic LPG prices are regulated and subsidised; the government fixes prices for the 14.2 kg domestic cylinder used by households under Pradhan Mantri Ujjwala Yojana and other household connections. Commercial LPG (19 kg cylinders) is priced at market rates. The government uses the Direct Benefit Transfer (DBT) mechanism to transfer LPG subsidy directly to beneficiaries' bank accounts rather than subsidising the cylinder at the pump.
- Key OMCs: IOCL, BPCL, HPCL (all under Ministry of Petroleum and Natural Gas)
- LPG subsidy delivery: Direct Benefit Transfer (DBT) since 2015 under PAHAL scheme
- Pradhan Mantri Ujjwala Yojana (PMUY): Launched May 2016, provides subsidised connections to BPL households
- PMUY 2.0 launched 2021, extended to migrant households
- LPG Control Order authority: Petroleum and Natural Gas Regulatory Board (PNGRB) Act and Essential Commodities Act
Connection to this news: The government's Control Order directing refineries to divert all C3-C4 streams to OMCs is an exercise of regulatory authority to prioritise domestic household supply during a supply shock.
Very Large Gas Carriers (VLGCs) and Shipping Infrastructure
A Very Large Gas Carrier (VLGC) is a specialised vessel designed to transport liquefied petroleum gases (LPG) in bulk at low temperatures and/or high pressure. VLGCs typically carry 80,000–85,000 cubic metres of LPG. India does not maintain a large fleet of its own LPG tankers; most of its LPG is imported on foreign-flagged vessels, which creates a dependency risk during geopolitical disruptions. Securing dedicated VLGCs on long-term charter is a key mitigation strategy.
- VLGC capacity: ~80,000–85,000 cubic metres of LPG per vessel
- Two Indian-flagged LPG carriers: Shivalik and Nanda Devi (successfully transited Strait of Hormuz in March 2026)
- 20 VLGCs secured by Indian government to transport LPG from alternative sources
- US LPG deal: 2.2 million tonnes per annum for 2026 (~10% of annual import requirement)
- Alternative routes explored: US Gulf Coast, West Africa, Australia
Connection to this news: The securing of 20 VLGCs and the US LPG deal represent emergency and medium-term supply diversification measures triggered by the Hormuz disruption.
Key Facts & Data
- India's LPG import dependence: ~60% of consumption; ~90% of imports via Strait of Hormuz
- Monthly LPG consumption: ~2,700 TMT; domestic production: ~1,036 TMT
- LPG Control Order issued: March 8, 2026 (Ministry of Petroleum and Natural Gas)
- Production increase post-order: 25–30% within 7 days
- VLGCs secured: 20 vessels for alternative-source LPG imports
- US LPG deal: 2.2 MT/year (~10% of annual imports)
- Underground LPG storage being fast-tracked at Mangaluru and Visakhapatnam
- PMUY launched: May 1, 2016; extended as PMUY 2.0 in August 2021