India Establishes Groundbreaking LPG Supply Agreement with the US

In a transformative agreement poised to redefine its energy dynamics, India has entered into its inaugural structured, long-term deal to import liquefied petroleum gas (LPG) from the United States. This contract, set to take effect for one year starting in 2026, will import approximately 2.2 million tonnes per annum (MTPA) from the US Gulf Coast, making up nearly 10% of India's total annual LPG imports.

Union Petroleum and Natural Gas Minister Hardeep Singh Puri remarked that this agreement marks “a remarkable advancement” in India’s drive to secure reliable and reasonably priced LPG supplies for households across the nation. This contract is aligned with the Mont Belvieu pricing, the leading pricing hub for LPG in the US, ensuring clarity and consistency with global market benchmarks.

Enhancing Supply Diversity for Energy Stability

As the world’s second-largest LPG consumer, India heavily depends on West Asian nations, which account for over half of its LPG imports. The swift increase in household LPG usage, partly due to the government’s Ujjwala Yojana initiative, has further amplified demand. By tapping into the US market, India aims to mitigate supply-chain vulnerabilities, stabilize pricing, and protect consumers from global price fluctuations.

Despite a staggering rise of over 60% in global LPG prices last year, the Indian government upheld Ujjwala beneficiaries’ cylinder prices at Rs 500–550, absorbing more than Rs 40,000 crore in subsidies. This agreement with the US is anticipated to bolster these efforts, ensuring dependable supplies for households while enhancing India’s collaborative energy efforts with global partners.

Fostering Sustainable Energy Partnerships

The contract was jointly negotiated by Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) after extensive discussions with US suppliers. Officials believe that this landmark agreement may facilitate longer-term contracts in the future, solidifying energy cooperation between India and the US in the years ahead.

As India’s LPG market continues to expand, especially in rural regions, diversifying supply sources remains a crucial strategic focus. By locking in structured imports from the US, India is not only enhancing its energy security but also decreasing dependence on single-source markets, promoting price predictability for millions of households nationwide.