India plans to source about 10 per cent of its cooking gas imports from the US beginning in 2026 as part of a broader effort to boost energy purchases to narrow its trade gap with Washington, four industry refining sources familiar with the matter said.
The world’s third biggest oil importer and consumer relies heavily on Middle Eastern producers of liquefied petroleum gas (LPG), with more than 90 per cent of its roughly 20.5 million metric tonnes of imports in 2024 coming from the region.
LPG is a mix of propane and butane used for cooking fuel and is mainly imported by state retailers Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp and sold at a subsidised price to households.
India had rarely bought US LPG in the past due to higher freight costs, but state retailers began buying US LPG in May after China imposed retaliatory import tariffs on U.S. propane.
India plans to eliminate import tax on US propane and butane used for making LPG, sources previously told Reuters.
India has pledged to increase US energy purchases by $10 billion to $25 billion in the near future and the two nations in February agreed to target $500 billion in bilateral trade by 2030.
India’s import of US oil has more than doubled this year, data obtained from sources showed.
“We are looking to the US as a reliable alternative source of both crude and LPG. We need to diversify our sources of LPG,” said one of the sources who declined to be named because he was not authorised to speak to media.
India has been diversifying its crude oil suppliers to reduce geopolitical risks and support its growing refining capacity. However, its LPG suppliers remain concentrated in the Middle East, typically purchased on a free-on-board (FOB) basis.
Chinese import tariffs on US propane, currently at 10 per cent, have opened up arbitrage opportunities for Indian buyers, further incentivising a shift toward US cargoes, a second source said.
“We would prefer to import from the US on a delivered basis to mitigate freight risks — similar to how we already buy US crude,” he said.
Indian state refiners are seeing annual LPG demand growth of about 5 per cent to 6 per cent, with total imports projected to rise to 22 million tonnes to 23 million tonnes by 2026, two of the sources said.
India’s oil ministry and the three state fuel retailers did not immediately respond to requests for comment.
Pricing will be key to determining the exact volume of US LPG imports, a third industry source said.
The International Energy Agency expects India’s LPG demand to grow at an average of 2.5 per cent between 2024 and 2030, reaching 1.2 million barrels per day, or roughly 37.7 million tonnes.
