Indian Oil Corporation, India’s largest refiner, has finalised a deal with Algeria’s state energy company Sonatrach to import liquefied petroleum gas in 2027, according to a report.
The agreement marks another step in India’s effort to diversify LPG supplies after disruptions around the Strait of Hormuz affected energy flows and forced the country to ration cooking gas supplies.
IOC to Receive Up to 55,000 Tonnes Every Month
Under the agreement, IOC will receive one very large gas carrier carrying between 45,000 tonnes and 55,000 tonnes of LPG every month, Reuters reported, citing sources. The cargoes will contain a mix of propane and butane.
The deal revives an earlier supply relationship between IOC and Sonatrach. IOC previously had a term agreement with the Algerian company but later shifted toward purchases from Middle Eastern suppliers.
Algerian LPG is also priced below the Saudi Aramco Contract Price, according to the report. The IOC-Sonatrach arrangement will be based on a free-on-board basis.
ALSO READ: India Readies Big LPG Output Boost As Hormuz Uncertainty Lingers
India Expands Its LPG Supplier Base
India resumed LPG imports from Algeria in June. Preliminary LSEG trade-flow data indicates that the country could receive around 110,000 tonnes of Algerian LPG in August.
At the same time, India has increased purchases of US LPG to make up for reduced supplies from the Middle East. The country plans to source up to 25% of its LPG imports from the US in 2027, according to the report.
The three state-owned fuel retailers, IOC, Hindustan Petroleum Corporation and Bharat Petroleum Corporation, are also expected to jointly tender for US LPG supplies.
The diversification highlights India’s push to strengthen its cooking-gas supply chain and reduce exposure to disruptions along the Middle East energy corridor. India is also encouraging consumers to shift toward piped natural gas as it works to reduce pressure on imported LPG.
ALSO READ: Govt Launches Incentive Scheme To Help Households Switch From LPG To PNG
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