India has entered into its first-ever structured long-term contract for importing liquefied petroleum gas from the United States, a pivotal move to fortify energy security and expand supply diversity amid escalating global uncertainties. Union Petroleum and Natural Gas Minister Hardeep Singh Puri disclosed on Monday that public-sector oil companies have concluded a one-year agreement to source approximately 2.2 million tonnes per annum of LPG from the US Gulf Coast for the 2026 contract period. This amount constitutes nearly 10% of India’s total yearly LPG imports, representing a substantial realignment in national sourcing tactics.
The deal stands as India’s inaugural formalized structured LPG acquisition from the US and is anchored to Mont Belvieu, the leading LPG pricing benchmark in America. A collaborative group comprising officials from Indian Oil Corporation, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd journeyed to the US over the preceding months to bargain with prominent American suppliers.
A Milestone in Energy Diversification
Puri hailed the accord as a groundbreaking achievement, pointing out that one of the globe’s quickest-expanding LPG markets is now directly tied to US resources. He highlighted persistent initiatives to vary procurement channels to ensure safe and economical LPG reaches Indian homes, labeling this pact a vital progression in those endeavors. Even with global LPG rates climbing over 60% in the last year, the government has capped prices at ₹500–550 per cylinder for Pradhan Mantri Ujjwala Yojana recipients, despite actual costs soaring to ₹1,100, by bearing a surplus burden surpassing ₹40,000 crore.
Strategic Shift Away from Traditional Suppliers
India ranks as the world’s second-largest LPG user, fulfilling more than half its demand via imports, predominantly from West Asian countries. Integrating a significant volume from the US aligns with strategies to diminish dependency on established sources, enhance supply reliability, and buffer against volatile price swings. The minister affirmed that this arrangement will deliver secure, affordable, and consistent LPG to households nationwide.
Boosting Bilateral Energy Cooperation
The partnership is set to deepen India-US energy relations and may lay groundwork for prolonged supply arrangements in the future. For local oil distribution firms, moving beyond a single regional focus mitigates supply disruptions and fosters improved price predictability. As India’s LPG consumption continues to surge, particularly in countryside areas, the administration regards additional source diversification as an essential objective.
