MC EXCLUSIVE India invokes emergency provisions, asks refiners to boost LPG output amid Gulf crisis

India invokes emergency provisions, asks refiners to boost LPG output amid Gulf crisis

• India orders refiners to increase LPG production amid tensions
• Propane and butane must be used only for LPG, not petrochemicals
• Order to secure domestic LPG supply takes immediate effect

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The Indian government has asked public and private refiners to increase their production of Liquified Petroleum Gas (LPG) used as cooking fuel as the escalating tensions in the Middle East have posed risks to New Delhi’s energy supplies, official sources said.

“Indian government has passed an order to all public and private refiners to produce more LPG and not divert or utilise propane and butane for other petrochemical products,” official sources said.

Invoking the emergency powers under the Essential Commodities Act, 1955, the government has directed Indian refiners to maximise their output of LPG asking public sector oil marketing companies to ensure that LPG so procured is marketed solely to consumers of domestic LPG.

The provisions under the Act allows the central government to direct Indian companies to increase production of commodities facing a supply shortfall, official sources said.

“All oil refining companies operating in India shall maximize and ensure that propane and butane (primary components of LPG) streams produced, recovered, fractionated or otherwise available with them are utilized for production of Liquefied Petroleum Gas (LPG) and make it available to the three public sector OMCs namely IOCL, HPCL and BPCL only,” the official order reviewed by Moneycontrol said.

The order dated March 5, 2026 also said that all oil refining companies shall not divert, utilize, process, crack, convert or otherwise employ propane or butane streams for manufacture of petrochemical products or other such downstream derivatives.

“Any contravention of this order shall attract action under the Essential Commodities Act, 1955 and the Petroleum Products (Maintenance of Production, Storage and Supply) Order, 1999, and any other applicable law for the time being in force,” the order said.

The order shall come into force with immediate effect and shall remain in force until further orders of the central government.

Government sources said India remains well positioned in terms of crude oil, refined product and LPG availability. “India is very comfortably placed in its oil, refined products, and LPG supplies,” the source said.

Officials added that India has substantial refining capacity and could shift output priorities if required.

The escalating tensions in the Middle East have not only put India’s crude oil supplies at risk but have also pressured the country’s LPG flows, with 80–85% of its LPG needs, with the majority sourced from Gulf suppliers, almost entirely transiting via the Strait of Hormuz.

Analysts also noted that while India’s crude flows can be buffered through strategic petroleum reserves, commercial stocks, and Russian optionality, LPG, however, has thinner structural buffers. Unlike crude, LPG sourcing flexibility is limited, making the potential impact more acute, they say.

As per data from the Petroleum Planning and Analysis Cell, the country imported 18.79 million metric tonnes of LPG during April-January of FY26 against 17.2 million tonnes imported during the same period of the previous fiscal. The country’s LPG consumption stood at 28 million tonnes during the period compared to 31.3 million tonnes in FY25.