Context :- In a historic first, Indian Public Sector Undertakings (PSUs) have signed a structured, long-term contract to import LPG (Liquefied Petroleum Gas) from the United States. This move marks a significant shift in India’s energy procurement strategy, traditionally dominated by West Asian suppliers.
Decoding the Deal :
- The Contract: A one-year structured agreement for the contract year 2026.
- Volume: Import of 2.2 Million Tonnes Per Annum (MTPA) (approx. 10% of India’s annual imports).
Domestic Import Landscape
- Dependency: India imports approximately 60% of its LPG requirements (21 million tonnes in 2024).
- Source Concentration: Currently, 90% of imports are sourced from West Asia (UAE, Qatar, Saudi Arabia, Kuwait).
- Market Drivers: Demand continues to rise rapidly, driven largely by the expansion of the Pradhan Mantri Ujjwala Yojana.
- Stakeholders:
- Buyers (India): IOCL, BPCL, and HPCL.
- Suppliers (US): Chevron, Phillips 66, and TotalEnergies Trading.
- Pricing Benchmark: Linked to Mont Belvieu (the standard US LPG pricing hub), offering a transparent alternative to the Saudi Contract Price (CP).
Strategic Significance
- Diversification: Mitigates geopolitical risk and supply shocks by reducing over-reliance on West Asian suppliers.
- Bilateral Relations: Strengthens the India-US energy partnership and helps address trade imbalances amid ongoing tariff negotiations.
- Energy Security: Establishes a robust new energy trade corridor, enhancing national energy security.
