Indian State-Owned Companies Secure First Structured US LPG Contract, Bolstering Energy Diversification

Indian state-owned oil companies have taken a landmark step by concluding the first structured, long-term contract to import liquefied petroleum gas (LPG) from the United States. The agreement involves procurement of about 2.2 million metric tons (close to 10% of India’s annual LPG imports) for the year 2026, sourced from the US Gulf Coast. This initiative aligns with India’s broader energy diversification strategy aimed at reducing dependence on Middle Eastern suppliers and enhancing energy security.

The contract enables Indian refiners to purchase from reputable US suppliers, including Chevron, Phillips 66, and TotalEnergies Trading SA, following competitive joint tenders. The deal also allows flexibility for one in every four cargoes to be sourced from other origins, enhancing supply chain resilience.

This development follows ongoing diplomatic and trade negotiations with the US, aiming to ease trade tensions and reduce tariffs imposed on Indian imports. As LPG serves more than 331 million Indian households as a primary cooking fuel, this agreement promises to stabilize domestic supply and pricing.

Key Highlights

Indian Oil Corporation, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited signed a one-year contract to import 2.2 million metric tons of US LPG in 2026.​

US suppliers Chevron, Phillips 66, and TotalEnergies Trading SA won the tender to supply LPG, marking India's first structured US-USPG contract.​

The contract includes flexibility to source one out of every four cargoes from other origins to ensure supply stability.​

The deal supports India’s strategy to diversify energy imports and reduce reliance on Middle Eastern LPG suppliers.​

India’s LPG market caters to over 331 million households, with more than 60% of demand met through imports.​

Sources: Business Standard, Reuters, ANI News, Bloomberg, Economic Times​