India facing LPG supply gap of 400,000 barrels per day: Report

LPG supply: India, the third-largest consumer of liquefied petroleum gas (LPG), reportedly faces a supply gap of 400,000 barrels per day. 

According to a report in Nikkei Asia that credited Kpler for the data, India’s LPG imports in April stood at 377,620 barrels per day, far less than 851,870 barrels that were being imported every day in February when the Strait of Hormuz was fully operational before the US-Israel’s attack on Iran. Tehran closed the strait in response to the conflict soon after. 

The report stated that domestic production grew to 530,000 barrels per day in April, which is at near full capacity. 

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The government, meanwhile, has been undertaking measures to mitigate the supply crunch. It urged households with a piped natural gas (PNG) connection to surrender their LPG connections. The government gave such households a period of three months to disconnect their LPG subscription. In order to do this, it came up with the ‘one household, one connection’ rule, making it illegal for the same household to hold both PNG and subsidised domestic LPG. 

The government also increased the price of regular 14.2-kg LPG cylinders by ₹60 in early March.  

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On May 11, the country had 45 days of rolling stock, along with 60 days’ worth of crude oil and natural gas stocks each. India does not maintain long-term strategic reserves of LPG and imports roughly two-thirds of its total LPG needs. The United Arab Emirates, Qatar, Kuwait and Saudi Arabia provide about 80 per cent of India’s LPG imports. 

India also tried to diversify its LPG purchases and has bought LPG from Iran, Australia, Argentina and Chile, who provided 43,000 barrels of LPG per day in April, up from nothing in February, said the report. 

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Not only is this a significantly smaller figure, as compared to the 678,000 barrels per day dispatched by the four Middle Eastern suppliers, distance is also a key factor. The report added that it takes about 20 days for the Australian supplies to reach India, while the exports from Argentina and the United States, that exported 149,000 barrels per day to India in April, can take 35-45 days.