In a groundbreaking move, Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) have collaboratively signed a one-year structured contract in November 2025. This agreement is set to facilitate the import of approximately 2.2 million tonnes per annum (MTPA) of Liquified Petroleum Gas (LPG) from suppliers in the United States of America (USA) for the year 2026. This marks a significant milestone as India's first-ever structured LPG purchase deal directly from the USA for a long-term supply.
The 2.2 MTPA contract is a strategic move, accounting for nearly 10% of India's annual LPG imports. This structured deal brings with it the advantages of a fixed annual quantity, predictable pricing, and assured supply, attributes that are essential for steady energy management. Previously, India relied on one-time shipments for its LPG imports from the USA.
Under the terms of this contract, the LPG will be sourced from the Gulf Coast of the USA. The pricing of the LPG will be linked to the Mont Belvieu benchmark, a standard for USA LPG pricing. This linkage ensures a transparent and consistent pricing model, providing financial stability and predictability over the contract period.
India stands as one of the world's largest consumers of liquefied petroleum gas (LPG), primarily used for household cooking. Domestic production of LPG in India can only meet about 35% of the country's total demand, necessitating a dependence on imports to satisfy the remaining 65%. This contract with the USA is poised to play a crucial role in stabilizing India's LPG supply chain.
Given the importance of this contract, it not only signifies a shift towards structured and predictable energy import strategies but also enhances India's energy security. With assured supply and stable pricing, this agreement is a step forward in managing the country's growing energy needs efficiently.
Overall, this landmark contract represents a significant evolution in India's approach to securing essential energy resources, paving the way for future structured energy agreements.
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