India Orders Refiners to Prioritise Propane and Butane for LPG Production Amid Hormuz Disruption

India’s Ministry of Petroleum and Natural Gas (MoPNG) has directed all domestic refineries to prioritise the use of propane and butane streams for liquefied petroleum gas (LPG) production, as disruptions in the Strait of Hormuz threaten the country’s LPG imports.

According to the ministry’s order issued on Thursday, ensuring uninterrupted LPG supply is critical as the fuel remains a primary cooking source for millions of households across India.

Officials said the directive was issued in the public interest to prevent shortages of the essential domestic fuel.

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Ensuring Domestic LPG Availability

The government stressed that LPG is an essential household fuel, widely used for cooking throughout the country.

India currently has approximately:

• 33.08 crore active domestic LPG consumers

• 10.51 crore beneficiaries under the Pradhan Mantri Ujjwala Yojana (PMUY)

With around 90% of LPG consumption coming from household use, supply disruptions could have immediate social and economic consequences.

Compounding the challenge is the fact that India does not maintain strategic reserves of LPG, making the country particularly vulnerable to supply shocks.

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Hormuz Disruption Threatens Imports

India depends heavily on imports to meet its LPG demand.

• West Asia accounts for 85–90% of India’s LPG imports

• Most shipments pass through the 34-kilometre-wide Strait of Hormuz, one of the world’s most critical energy chokepoints.

According to energy analytics firm Vortexa, the Middle East Gulf (MEG) region — excluding Iran — supplied about 92% of India’s LPG imports in 2025, equivalent to approximately 720,000 barrels per day.

The ongoing conflict in the region and shipping disruptions have therefore raised concerns about the continuity of supplies.

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Refiners Directed to Maximise LPG Output

Under the new directive, all oil refining companies operating in India must maximise the use of propane and butane streams for LPG production.

The ministry’s order specifies that:

• Propane and butane streams must be prioritised for LPG production.

• These streams must be supplied exclusively to public sector oil marketing companies (OMCs) — Indian Oil Corporation (IOCL), Hindustan Petroleum (HPCL), and Bharat Petroleum (BPCL).

• Refiners are prohibited from diverting propane or butane streams for petrochemical production or other downstream products.

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LPG Supply Restricted to Domestic Consumers

The government also instructed public sector OMCs to ensure that LPG produced under this directive is distributed solely to domestic household consumers.

This measure aims to safeguard cooking fuel availability and prevent supply diversion during the current geopolitical crisis.

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Legal Consequences for Non-Compliance

The ministry warned that violations of the directive would lead to legal action under several regulations, including:

• Essential Commodities Act, 1955

• Petroleum Products (Maintenance of Production, Storage and Supply) Order, 1999

Additional penalties may apply under other relevant laws currently in force.

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Outlook

The directive highlights the government’s urgent effort to protect household energy security as geopolitical tensions threaten global energy supply chains.

If disruptions in the Strait of Hormuz persist, India may need to rely more heavily on domestic refinery output and alternative import sources to stabilise LPG supplies.