India has awarded its first long-term contract to import liquefied petroleum gas (LPG) from the United States, marking a significant step in diversifying the country’s energy supply and reducing reliance on Middle Eastern sources.
The contract, set to begin in 2026, covers approximately 2 million metric tons of LPG, delivered through 48 very large gas carrier (VLGC) cargoes. Major international suppliers including Chevron, Phillips 66, and TotalEnergies Trading SA have been selected to fulfill the tender, according to industry sources.
Union Petroleum and Natural Gas Minister Hardeep Singh Puri described the deal as “historic,” noting that India’s state refiners — Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) — had engaged in extensive discussions with U.S. producers to secure the agreement.
Strategic Implications
Diversifying Supply: India has traditionally relied on Gulf countries such as Saudi Arabia, UAE, Qatar, and Kuwait for LPG. This long-term deal allows India to reduce dependence on the region and mitigate supply risks.
Energy Security: By securing a steady U.S. LPG supply, India is enhancing energy security for its domestic market, which remains heavily reliant on imported cooking gas.
Market Dynamics: The deal comes amid global trade shifts, including U.S.-China tariff tensions on propane, which have created opportunities for India to source competitively priced U.S. LPG.
Economic and Consumer Impact
The pricing for the U.S. LPG imports will be benchmarked against Mount Belvieu, a key international pricing reference. Analysts say that this long-term sourcing strategy could help stabilize domestic LPG prices and reduce exposure to volatile international markets.
Despite rising global LPG prices — which surged over 60% in the past year — the Indian government has maintained subsidized prices for households under the Pradhan Mantri Ujjwala Yojana, absorbing over ₹40,000 crore in subsidy costs to shield consumers.
Future Outlook
India aims to source around 10% of its LPG imports from the U.S. starting in 2026, signaling a broader strategy of energy diversification and stronger trade ties with the United States. Flexible terms in the contract allow some cargoes to be sourced from non-U.S. origins, providing refiners room to manage logistics and price fluctuations.
Energy experts say the deal represents both a commercial and geopolitical milestone, reflecting India’s evolving energy strategy as it seeks to secure stable and diversified fuel sources amid global market volatility.
