India boosts LPG production as festive demand rises and Gulf supplies remain uncertain

State-owned refiners are ramping up liquefied petroleum gas (LPG) production as the festive season lifts household demand, while disruptions to supplies from the Persian Gulf continue to pose risks to the country’s cooking-fuel security, Bloomberg News reported on Wednesday.

Domestic LPG output has climbed to around 44,000 tonnes a day, nearly 20% higher than the August average, according to people familiar with the matter. The increase comes as India prepares for a period of stronger consumption running through Diwali in November, while winter demand could provide another boost.

India, the world’s second-largest LPG importer, has historically relied heavily on supplies from the Persian Gulf. That dependence has left the country exposed to disruptions caused by the conflict and trade upheaval in the region.

Refiners raise domestic output

Domestic refiners had reduced LPG production from wartime highs after alternative cargoes began arriving from the US and Africa during the summer. Supplies from Abu Dhabi National Oil Co. (ADNOC) through Oman’s Sohar port also provided an additional source of imported LPG.

However, domestic production has increased again as refiners prepare for higher demand and continued uncertainty around Gulf supplies.

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Household consumption is expected to rise during the festival season, which has already begun and continues until Diwali. Rural LPG availability has also improved, with the government reducing the minimum refill waiting period to 25 days from 45 days imposed during the supply emergency in March.

Despite the seasonal increase, overall LPG demand is expected to remain around 10% below the same period last year, mainly because industrial demand that was disrupted during the conflict has yet to fully recover.

Gulf supply remains a concern

Supply risks have not disappeared. A September cargo for Bharat Petroleum Corp. and two cargoes for Indian Oil Corp., all due from ADNOC, could not be collected, according to people familiar with the matter.

ADNOC has indicated that it plans to supply committed October volumes, including five cargoes for Indian Oil and three each for Bharat Petroleum and Hindustan Petroleum.

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“As India’s largest LPG supplier, ADNOC remains fully committed to meeting our customers’ needs and supporting India’s energy security,” an ADNOC spokesperson told Bloomberg News.

India is also looking to deepen its alternative supply sources. State-owned refiners could seek term LPG supplies from the US covering as much as 20% of India's imports next year, according to the people.

The shift builds on India's efforts to diversify its LPG sourcing. The US accounted for just 6% of India's LPG imports last year, but its share has since risen above 20%, making it the country's largest supplier.

The latest production increase therefore reflects more than seasonal demand. It also highlights India's efforts to strengthen domestic availability and diversify imports as uncertainty around traditional Gulf supply routes continues.

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Current LPG cylinder rates

On September 23, the price of a 14.2 kg domestic LPG cylinder stood at ₹942 in Delhi, ₹941.50 in Mumbai and ₹968 in Kolkata. Among the listed cities, Noida had the lowest price at ₹939.50, while Hyderabad recorded the highest at ₹994. The 19 kg commercial LPG cylinder was priced at ₹2,747.50 in Delhi and Noida, while Mumbai had the lowest listed price at ₹2,701. Hyderabad recorded the highest price among these cities at ₹2,996 per cylinder.

CNG and PNG prices

CNG prices varied from ₹86.98 per kg in Delhi to ₹112 per kg in Hyderabad across the listed cities. PNG rates ranged from ₹48.40 per SCM in Gurugram to ₹54.70 per SCM in Chandigarh.