New Delhi: Indian refiners have ramped up daily domestic production of liquefied petroleum gas (LPG) by around 10% in the past few days in the face of a supply squeeze from the , two people aware of the development said.
The refiners have also secured 20 very large gas carriers (VLGC) carrying around 1 million tonne (mt) cargo, mostly from the US, the people said on condition of anonymity.
However, the country is still short of another 20 VLGCs—totalling 2 mt—which Indian oil marketing companies (OMCs) have been scouting for since the war broke out on 28 February, these people added.
“Production has already gone up by 10%,” the first person cited above said, adding that India is looking at sourcing more LPG from all available sources, including the US, Canada, Australia and Algeria.
The second person said: “There was a shortfall of about 40 VLGCs, and 20 VLGCs have already been booked. So, import diversification is also taking place.”
The developments follow a late Monday evening tweet from the ministry of petroleum and natural gas (MoPNG), where it said that it has issued orders to oil refineries to increase LPG production and use such extra production for domestic LPG use.
It also said in the tweet that non-domestic supplies from imported LPG are being prioritized to essential non-domestic sectors such as hospitals and educational institutions.
Further, for LPG supply to other non-domestic sectors, a committee of three executive directors of the state-run OMCs has been constituted to review the representations for LPG supply to restaurants, hotels and other industries.
The officials cited above said that the committee would be available for requests from all industry bodies across the country and look into these requests on a case to case basis.
Queries sent to the petroleum ministry on Tuesday evening were not immediately answered.
Reliance Industries, which owns the world’s largest integrated refinery complex in Jamnagar, issued a statement late on Tuesday evening saying, “Our teams are working around the clock to optimize refinery operations and enhance LPG output so that supplies to the domestic market remain stable and reliable.”
The statement added that natural gas produced from the KG-D6 Basin will be diverted to support supply to priority sectors, “in line with national energy priorities and Government guidelines”.
India’s LPG demand and import dependence
The moves are significant as India has an annual LPG requirement of 31-32 mt, of which about 60-65% is imported, making it the world’s second largest LPG importer. The country relies heavily on West Asian supplies, mostly from Saudi Arabia, Qatar and UAE.
LPG imports in FY25 stood at $12.47 billion, producing 12.8 million tonnes. Imports in FY26 already touched $11.25 billion by January. So far this fiscal year, as of January, Indian refiners have produced 10.6 mt of LPG, according to data from the Petroleum Planning & Analysis Cell (PPAC).
In terms of LPG consumption, it stood at 31.3 mt in FY25, and in FY26, had already reached 30.85 mt as of January, with two months still to go in the fiscal.
Government emergency measures
On Tuesday, 10 March, the government stepped up efforts to ringfence domestic consumers from the effects of the war.
Invoking the Essential Commodities Act, the government on Tuesday issued a gazette notification, ordering gas producers and oil and gas marketing companies to ensure 100% assured supply of natural gas or LNG to domestic piped gas connections and compressed natural gas (CNG) for vehicles, curtailing allocations to sectors such as fertiliser, industry and power.
Supplies to other sectors will face restrictions. Industries and commercial consumers procuring gas through the national grid will receive 80% of their average supplies over the past six months, while fertilizer plants will be supplied 70% of their average allocation during the same period.
The notification also mandates a 35% cut in gas supplies to refineries and petrochemical companies.
The government had taken several steps earlier as well. On Monday, 9 March, the Centre for booking of cylinders and directed all LPG supplies to be routed for domestic consumption.
On 5 March, under the Essential Commodities Act, the government directed OMCs to prioritize supply of natural gas to city gas distribution (CGD) and cooking gas cylinders, thereby reducing supplies for other sectors including fertilizer, industries and power.
The order also required the use of petroleum products such as propane and butane for production of only domestic LPG, instead of other downstream products such as petrochemicals.
In a revised order issued on Monday, 9 March, the government directed all oil refining companies in the country—including those in special economic zones (SEZs) and petrochemical complexes—to divert the entire production of C3 and C4 streams such as propane and butane toward domestic LPG production.
On Saturday, the state-run oil marketing companies increased the price of domestic cooking gas by ₹60 per cylinder.
War escalation and supply disruption
Supply concerns intensified after deliveries from Qatar were disrupted following an attack on QatarEnergy’s Ras Laffan liquefaction complex on 2 March. The company suspended production after the attack.
Notably, India imports about 55% of its overall natural gas requirements. Of the $14.9 billion worth of gas imports in FY25, roughly half came from Qatar, according to data from the PPAC.
Shipping through the Strait of Hormuz has also been suspended, further tightening energy supplies. The strait, which connects the Persian Gulf to the Arabian Sea, carries about a fifth of global oil, gas and fertilizer shipments has been effectively closed since last week.
Market reaction
Oil prices, which crossed the $100 per barrel mark on Monday and reached $119 per barrel, fell on Tuesday after mixed signals from US president Donald Trump on the end of the war and his announcement that the US will lift oil-related sanctions to ease the supply situation.
At the time of writing the article, the April contract of the benchmark Brent on the Intercontinental Exchange (ICE) was trading at $92.28 per barrel, lower by 6.86% from its previous close. Similarly, the April contract of West Texas Intermediate (WTI) fell 6.16% to $88.93 a barrel.
Addressing the media on Monday, Trump said the US administration would remove oil-related sanctions and suggested the war could end soon, easing market concerns that had pushed prices to multi-year highs.
Although the president said he did not believe the conflict would end this week, he added the operation was ahead of schedule.
“We’re looking to keep the oil prices down,” he told the media. Taking to social media platform Truth Social, the US president warned Iran of stronger attacks if oil shipments through the Strait of Hormuz were disrupted.
IEA to meet on strategic reserves
Meanwhile, amid volatile oil market and supply concerns, the member countries of International Energy Agency (IEA) are scheduled to meet late on Tuesday to assess the energy supply scenario and discuss on the need to release stocks from strategic reserves.
Taking to X, Fatih Birol, executive director of the IEA said: “Given conditions in oil markets, I have convened an extraordinary meeting of IEA Member governments, which will take place later today to assess the current security of supply and market conditions to inform a subsequent decision on whether to make emergency stocks of IEA countries available to the market. As well as IEA Members, I am also in close contact about the situation with energy ministers from key energy producers and consumers around the world.”
Mint earlier reported that India is unlikely to participate in any global exercise of releasing oil from strategic reserves.
IEA member countries currently hold over 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation.