SDG 7: Affordable and Clean Energy | SDG 17: Partnerships for the Goals
Institutions: Ministry of Petroleum & Natural Gas
The Ministry of Petroleum and Natural Gas has announced that India’s PSU oil companies—IndianOil, BPCL, and HPCL—have concluded a historic one-year structured contract to import approximately 2.2 MTPA (Million Metric Tonnes Per Annum) of LPG from the US Gulf Coast for the contract year 2026. This landmark deal, a first for the Indian market, represents nearly ten percent of India’s annual LPG imports and marks a significant step in diversifying the nation’s energy sourcing options away from traditional suppliers.
The contract was finalized after discussions between Indian officials and major US producers, establishing Mount Belvieu as the benchmark for LPG purchases. This move is aimed at strengthening India’s energy security and ensuring a stable supply of affordable clean cooking fuel for millions of households, particularly Ujjwala beneficiaries. This is critical, as the Government of India incurred an expenditure of over ₹40,000 crore in the previous year to shield these families from the impact of rising international LPG prices, which had surged by more than 60 percent.
This strategic diversification of India’s LPG import sourcing is a critical step in de-risking the nation’s energy security. By opening a major import channel from the US, India not only stabilizes the supply chain for vital schemes like PM Ujjwala Yojana but also gains significant leverage in price negotiations with its traditional Middle Eastern suppliers, ultimately enhancing the long-term affordability of clean cooking fuel for its citizens.
What is the significance of the “Mount Belvieu” benchmark in this deal?→ Mount Belvieu is a major natural gas liquids (NGL) hub in Texas, USA, and its pricing is the leading benchmark for US-origin LPG (propane and butane). By basing the contract on this benchmark, India is diversifying its pricing risk away from its traditional reliance on the Saudi Aramco Contract Price (CP). This move allows India to access the competitive US shale gas market, secure more favorable pricing structures, and reduce its vulnerability to price shocks from a single geographic region.
Relevant Question for Policy Stakeholders: How will this new US sourcing arrangement impact India’s long-term energy relationship with its traditional suppliers in the Middle East?
Follow the full news here: India Secures First-Ever Major US LPG Deal