India's government has urged local refiners to increase production of liquefied petroleum gas—the country's main cooking fuel, amid the supply crunch resulting from the war in the Middle East.

Bloomberg reported today that India's production of LPG since February 28th had gone up by 25% to 46,000 tons per day. Local output is on course to rise further to 50,000 tons daily after Nayara Energy's refinery restarts after seasonal maintenance next month.

A separate report, meanwhile, suggested refiners will be losing money on the crank-up of LPG production, after Reliance Industries was projected to report lower profits for the latest quarter, including because of higher LPG production, which is a loss-making business at the moment.

Indian refiners have meanwhile secured 650,000 tons of supply for next month from foreign sources, including a record volume of U.S. liquefied petroleum gas, Bloomberg reported, citing unnamed sources. The total translates to 21,000 tons in daily supply.

“India has been facing challenges in LPG but the government has taken several steps,” Sujata Sharma, joint secretary at the country's oil ministry, said on Thursday, as quoted by Bloomberg. “Enough cargoes have been tied up.”

Some 60% of Indian households rely on liquefied petroleum gas as their primary cooking fuel, and the blockage at the Strait of Hormuz, where 90% of all Indian LPG imports pass through, has been immediately felt by consumers.

The disruption has caused soaring prices and, as a consequence, demand destruction. The government, meanwhile, has tried to tackle the crisis by redirecting LPG supply from industrial users to household consumers to ensure availability of cooking fuel. Indian authorities are also pushing for an expansion of the city pipeline gas networks to replace LPG cylinders and use where possible.

Even with all these measures, there is still a gap between what has been secured in terms of supply for May and pre-war consumption levels for LPG, which averaged 100,000 tons daily. 

Source: Oil Price.Com 

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