India Plans Strategic LPG Reserves as West Asia Conflict Exposes Energy Supply Vulnerabilities

The disruption in liquefied petroleum gas (LPG) supplies caused by the ongoing conflict in West Asia has highlighted India’s urgent need to strengthen its energy security infrastructure.

In response, the government has directed public sector oil marketing companies (OMCs)—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—to prepare a roadmap for creating strategic LPG reserves capable of meeting at least 30 days of national demand, over and above their existing commercial inventories.

Speaking to reporters on Friday, Petroleum Ministry Joint Secretary Sujata Sharma confirmed that work on the proposal has begun.

She said the government has asked OMCs to assess the feasibility of maintaining a minimum 30-day LPG reserve, although the plan remains at an early stage.

Details regarding timelines and storage methods are yet to be finalised.

Officials are evaluating multiple storage options, including underground caverns similar to India’s strategic crude oil reserves and above-ground storage facilities.

The final decision will depend on factors such as cost, technical feasibility, and operational efficiency.

The push for expanded LPG storage comes after the West Asia conflict severely disrupted fuel supplies through the Strait of Hormuz, a critical global energy shipping route.

LPG has emerged as the hardest-hit energy segment in the crisis. While India maintains strategic reserves of crude oil, it currently lacks dedicated emergency stockpiles for LPG and liquefied natural gas (LNG).

India relies heavily on imports to meet around 60 per cent of its LPG requirements, with nearly 90 per cent of those imports typically arriving through the Strait of Hormuz.

In practical terms, more than half of the country’s LPG consumption is linked to supplies transported through this narrow waterway.

The dependence is similarly significant for LNG imports, which account for roughly half of India’s natural gas needs, while around 40 per cent of crude oil imports also transit the route.

As supply disruptions intensified, authorities were forced to ration LPG supplies for industrial and commercial users in order to safeguard cooking fuel availability for more than 33 crore households.

The government also increased the minimum interval between household LPG refill bookings as part of its demand-management strategy.

Before the conflict, India’s LPG consumption averaged around 90,000 tonnes per day.

However, a combination of disrupted imports and seasonal demand moderation has reduced consumption to approximately 72,000 tonnes daily, according to Petroleum Ministry estimates.

To cushion the impact, domestic refineries have stepped up LPG production to record levels.

Refiners are also aggressively sourcing LPG cargoes from alternative suppliers, including the United States, Australia, and Russia. Diplomatic efforts have further helped secure the movement of several Indian LPG tankers stranded in the Persian Gulf.

As a result, domestic production has risen to around 50,000–52,000 tonnes per day, meeting nearly 70 per cent of current demand compared with about 40 per cent before the conflict.

Import figures underline the scale of the disruption. Data from commodity analytics firm Kpler shows that India imported an average of around 2 million tonnes of LPG per month between April 2025 and February 2026.

Imports then plunged to 1.1 million tonnes in March and slipped further to just 0.95 million tonnes in April as the crisis deepened.

The supply shock has prompted both government agencies and industry players to reassess India’s energy preparedness.

Policymakers are now considering additional storage infrastructure not only for LPG but also for LNG, while exploring options to expand the country’s strategic crude oil reserves.

Earlier in May, Petronet LNG Chief Executive Officer AK Singh revealed that plans were being developed to construct additional LNG storage tanks.

The objective is to create a stronger buffer against future supply disruptions and enhance the resilience of India’s energy network.

Despite these efforts, challenges remain. With uncertainty persisting over when shipping traffic through the Strait of Hormuz will return to normal levels, industry experts expect LPG supplies to remain tight for the foreseeable future.

The Strait of Hormuz, located between Iran and Oman, is one of the world’s most important energy transit routes.

Since the outbreak of the West Asia conflict following US-Israeli strikes on Iran on February 28, vessel traffic through the passage has collapsed dramatically.

Daily ship movements have fallen from around 130-140 before the conflict to fewer than 10, underscoring the magnitude of the disruption facing global energy markets and countries heavily dependent on these supplies, including India.