India Directs LPG Companies to Build 30-Day Strategic Reserves Amid Supply Concerns
Amidst disruptions in the Strait of Hormuz impacting energy supplies, India has instructed public sector oil companies to build a strategic reserve of Liquefied Petroleum Gas (LPG) equivalent to 30 days of demand. This move addresses the nation's significant reliance on LPG imports, with approximately 90% traditionally passing through the Strait of Hormuz. The government is also taking measures to prevent fuel diversion and ensure normal supply chains.
Key Highlights
- India mandates 30-day strategic LPG reserves for oil companies.
- Hormuz Strait disruptions drive the need for enhanced LPG reserves.
- Approximately 90% of India's LPG imports rely on the Hormuz route.
- Government is actively preventing fuel diversion to ensure availability.
- Measures aim to bolster energy security amidst regional conflicts.
- LPG, crucial for household cooking, faces supply chain vulnerabilities.
In response to the escalating geopolitical tensions in West Asia and the consequent disruptions to global energy supply chains, particularly those transiting the Strait of Hormuz, the Indian government has directed its public sector oil marketing companies (OMCs) to establish a strategic reserve of Liquefied Petroleum Gas (LPG) equivalent to at least 30 days of national demand. This directive aims to bolster India's energy security and mitigate the impact of potential supply shocks on the domestic market.
India's significant reliance on imports for its LPG consumption, estimated at around 60%, makes it particularly vulnerable to disruptions in this critical maritime chokepoint. Approximately 90% of these LPG imports traditionally pass through the Strait of Hormuz, highlighting the strategic importance of this waterway for the nation's energy needs. The ongoing conflict in West Asia has underscored this vulnerability, prompting the government to take proactive measures to enhance buffer stocks. Unlike crude oil, India has historically lacked dedicated strategic reserves for LPG and Liquefied Natural Gas (LNG), making this directive a significant step towards strengthening its energy infrastructure.
In addition to building reserves, the government is actively addressing other challenges related to fuel availability. Reports indicate that while overall supplies of petrol and diesel remain adequate, pockets of artificial scarcity have emerged due to arbitrage activities, with industrial consumers reportedly diverting cheaper retail fuel for their own use. To counter this, states and union territories have been asked to form special enforcement squads to prevent such diversions, black marketing, and unauthorised stocking of petroleum products. The Ministry of Petroleum and Natural Gas has clarified that the pricing cushion extended by OMCs is intended for retail consumers and not for industrial procurement.
Domestic LPG production has also been ramped up. Indian refiners have increased LPG production by over 30% in recent months to offset import shortages, a trend expected to continue. Despite these efforts, the government has advised citizens to avoid panic buying, assuring them of normal supply situations.
The decision to build strategic LPG reserves is part of a broader government strategy to enhance supply chain resilience and energy security amidst the volatile global geopolitical landscape. High-level meetings, such as those convened by the Informal Group of Ministers (IGoM) led by Defence Minister Rajnath Singh, have continuously reviewed the situation, assessing preparedness and response measures. These discussions have consistently emphasised the importance of maintaining adequate stocks of essential commodities and strengthening logistical frameworks to withstand external shocks.
The current LPG demand in India stands at approximately 72,000 tonnes per day, with domestic refineries producing around 50,000-52,000 tonnes daily. The government's move to mandate 30-day reserves aims to create a substantial buffer against any unforeseen import interruptions. This initiative underscores the critical role of LPG in Indian households, being the primary cooking fuel for over 33 crore families, and highlights the government's commitment to ensuring its stable and uninterrupted availability.
The news was published on May 29, 2026.
Sources for this report include Deccan Herald, PIB, The Times of India, Swarajyamag, News On AIR, and various other news outlets covering energy and government policy. The information gathered from these sources confirms the central claim of the Deccan Herald article, providing corroborating details on the government's directives, the rationale behind them, and related measures being undertaken.
Frequently Asked Questions
Why is India building strategic LPG reserves?
India is building strategic LPG reserves to mitigate the risk of supply disruptions caused by geopolitical tensions in West Asia and potential blockades or issues in the Strait of Hormuz, through which a significant portion of its LPG imports travel.
What is the capacity of the new LPG reserves?
The government has directed public sector oil marketing companies to build strategic reserves equivalent to at least 30 days of national LPG demand.
How much of India's LPG is imported through the Strait of Hormuz?
Approximately 90% of India's LPG imports traditionally pass through the Strait of Hormuz, making the country vulnerable to disruptions in this region.
What other measures are being taken to ensure fuel availability?
The government is also taking steps to prevent the diversion of fuel from retail outlets to industrial consumers, ensuring adequate domestic production of LPG, and advising citizens against panic buying.
Does India have strategic reserves for other fuels like crude oil?
Yes, India already has strategic reserves for crude oil, and the directive to build LPG reserves is a significant step to strengthen its energy security for cooking fuel as well.