Govt Orders Refiners to Maximise LPG Output; Curbs Petrochemical Diversion as Hormuz War Rages

India has invoked emergency powers and directed refiners to maximise production of liquefied petroleum gas (LPG) to prevent a shortage of the cooking fuel after supply disruptions caused by the Middle East crisis, a government order showed.

The world's second-biggest importer of LPG last year consumed 33.15 million metric tons of cooking gas, which is a mixture of propane and butane.

Imports account for about two-thirds of LPG consumption, with the Middle East making up about 85–90% of that supply.

All oil refiners are asked to "maximise and ensure that propane and butane available with them are utilized for production of LPG", the order issued late on Thursday showed.

The government has asked producers to make LPG, propane and butane available to state refiners - Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp for distribution to households.

The country has about 332 million active LPG consumers, government data showed.

A mandatory diversion of propane and butane for LPG production would curtail the output of alkylates, a gasoline blending component, by Reliance Industries Ltd.

Reliance exported about four cargoes per month of alkylates last year, according to LSEG data.

The government also ordered refiners not to divert propane and butane for petrochemical production.

Diverting propane and butane for LPG production will hurt margins for petrochemical companies that make products such as polpropyline and alkylates, as they fetch better prices than LPG, a trade source said.

Also read: Oil Shock, War Fears Send Asian Markets To Their Worst Week Since 2020