Liquefied Petroleum Gas (LPG) in India
Overview
LPG is the primary cooking fuel for households in India and has seen rapid expansion due to government initiatives.
Expansion of LPG Access
- Near universal household coverage (~100%) achieved
- Increased from about 62% coverage in 2016
- Driven mainly by the Pradhan Mantri Ujjwala Yojana (PMUY)
- Traditional fuels like firewood and kerosene have declined significantly
Growth in Consumption
- LPG consumption has nearly doubled (2012–2023)
- Expansion supported by:
- Increased bottling plants
- Wider distributor network
Composition and Production
LPG mainly consists of:
- Propane
- Butane
- Small quantities of heavier hydrocarbons
Sources of production:
- Natural gas processing
- Crude oil refining
- Petrochemical industries
Domestic Production
- Public sector Oil Marketing Companies such as:
- Indian Oil Corporation (IOC)
- Bharat Petroleum Corporation Limited (BPCL)
- Together meet about 40% of India’s LPG demand
Imports and Supply Dependence
- Around 60% of LPG demand is met through imports
- Major suppliers:
- Saudi Arabia
- Qatar
- Most imports pass through the Strait of Hormuz, making supply vulnerable
Emerging Challenges
- Disruptions in West Asia affecting shipping routes
- Increased costs and supply uncertainty
- Government response includes boosting refinery output of propane and butane
Alternative Sources
- United States (Natural Gas Liquids from shale gas)
- Russia
- Limited availability from China (due to high domestic consumption)
Liquefied Natural Gas (LNG)
Definition
LNG is natural gas (mainly methane) cooled to about –160°C, converting it into liquid form for efficient storage and transport.
Importance
- Reduces volume significantly, enabling long-distance transport
- Crucial for industries, power, and urban gas networks
India’s LNG Supply Structure
Domestic vs Imports
- Domestic production: ~50% of demand
- Imports (as LNG): ~50%
Key Suppliers
- Qatar (largest supplier; long-term contracts)
- United States
- Australia
- Russia
Qatar alone accounts for a significant share of global LNG exports, making it strategically critical.
LNG Infrastructure in India
Import and Processing
- LNG is imported via specialised carriers
- Stored in cryogenic tanks
- Converted back to gas through regasification terminals
- Transported via pipeline networks
Key Limitation
- India has limited storage capacity
- Unlike Europe, India lacks extensive underground gas storage
- Relies largely on real-time consumption, increasing vulnerability
Uses of Natural Gas in India
Major consumption sectors:
- Fertilizer industry (~30%)
- City Gas Distribution (~21%)
- Power generation (~13%)
Other uses:
- Petrochemicals
- Refining
- Industrial processes
Natural gas is especially critical for ammonia production, which is essential for fertilizers.
Impact of West Asia Conflict
The conflict has significantly affected India’s energy landscape:
Key Impacts
- Disruption of supplies from the Persian Gulf
- Rising global LPG and LNG prices
- Increased volatility in LNG spot markets
Market Indicators
- The JKM Index (Asian LNG benchmark) has shown high volatility
Mitigating Factors
- Lower seasonal demand for fertilizers reduces immediate pressure
- Some industries can switch to alternative fuels such as:
- Naphtha
- Furnace oil
Way Forward
India’s energy security is constrained by heavy import dependence. Key policy priorities include:
- Enhancing domestic production of LPG and natural gas
- Expanding LNG storage infrastructure
- Diversifying import sources
- Strengthening strategic reserves
- Promoting alternative and renewable energy sources
Conclusion
While India has made significant progress in expanding LPG access and increasing natural gas usage, its reliance on imports exposes it to geopolitical risks. Strengthening domestic capabilities and infrastructure will be essential to ensure a stable, resilient, and secure energy system.
