India ramps up US LPG imports to record levels

India’s imports of liquefied petroleum gas (LPG) from the US are set to exceed 1 mn tons in June, a record high, as refiners turn to alternative suppliers following disruptions to Middle Eastern energy flows during the war, Reuters reports.

The new calculus: India is now expected to import up to 1.2 mn tons of US LPG in June, compared with 648k tons in May — a 77.5% m-o-m surge. Imports from the UAE are also recovering, with June volumes expected at 300-400k tons, while Kuwait is set to supply around 45k tons.

Why it matters: Before the conflict and the temporary closure of the Strait of Hormuz, about 90% of India’s LPG imports came from the Gulf, with total imports averaging around 2 mn tons per month. LPG imports fell to just 696k tons in April, before recovering to 1.1 mn tons in May. The surge reflects emergency spot-market purchases as the government prioritized uninterrupted cooking gas supplies for households despite higher costs.

Demand management eases pressure: To offset supply risks, India asked refiners to maximize LPG production, prioritize household distribution, and accelerate piped-gas connections. The measures have already reduced LPG consumption by 15-20%, industry sources told the newswire.

State-run refiner Indian Oil Corporation Ltd (IOCL) received no bids for the three tenders it floated last week, seeking vessels to transport crude oil and liquefied petroleum gas (LPG) cargoes from ports within the strait, as shipowners remain reluctant to sail through the strait until there is greater clarity on security conditions, The Economic Times reports.

“No one wants to take a risk as yet of ⁠going into the strait. Most ship owners are in wait-and-watch mode as they want clarity on ‌the terms of getting into the strait,” a shipbroker told the news outlet.

The details: IOCL was looking to ship around 45k metric tons of LPG between 30 June and 4 July from the ports of Ras Laffan in Qatar, Mina Al Ahmadi in Kuwait, and Ruwais in the UAE. IOCL invited bids for three ‌tenders to charter a very large gas carrier (VLGC), a very large ‌crude carrier (VLCC), and a Suezmax.

Sound smart: A VLCC carries 2 mn barrels of oil, a VLGC can hold about ‌45k metric tons of LPG, and a ‌Suezmax carries about 1 mn barrels of oil.

Taking stock: India imports more than 40% of its crude oil and 60% of LPG through the Strait of Hormuz. Qatar remains a key supplier of LPG, which is primarily used as a cooking fuel by Indian households.