India is taking significant steps to diversify its liquefied petroleum gas (LPG) supply chain, especially after recent disruptions in the Strait of Hormuz revealed its heavy reliance on Middle Eastern suppliers. The country has been facing LPG shortages, prompting a shift toward exploring alternative sources for its energy needs.
New Agreement with Algeria
In a recent development, the Indian Oil Corporation (IOC) has inked a deal with Algeria’s state-owned Sonatrach to import LPG shipments starting from 2027. Under this agreement, IOC plans to bring in between 45,000 and 55,000 metric tonnes of LPG monthly, totaling around 540,000 to 660,000 tonnes annually. This shipment will primarily consist of a blend of propane and butane, both of which are essential for cooking fuel in numerous Indian households. This partnership not only marks a comeback for Algeria as a key supplier but also highlights a strategic move to enhance India’s energy resilience.
This deal is significant as it enables India to step away from its previous dependence on Middle Eastern suppliers. Historically, IOC had a long-standing term agreement with Sonatrach before opting to source LPG largely from countries in the Gulf region. Algeria’s competitive pricing has made it a favorable option once again. Sources indicate that Sonatrach’s LPG pricing is more attractive compared to the established rates set by Saudi Aramco, allowing India to secure better deals without compromising on quality.
Africa’s Growing Role in India’s Energy Landscape
The partnership with Algeria is part of a broader initiative where India is increasingly engaging with African nations to bolster its energy security. Countries such as Nigeria, Angola, and Algeria are emerging as vital energy allies. Indian refiners have been sourcing crude oil from Africa due to the high quality and suitability of various grades for refining. In particular, Indian state refiners have ramped up their purchases of African crude, showcasing Africa’s valuable role in the international energy supply chain.
By diversifying partnerships beyond the Middle East, India aims to mitigate the risks associated with overreliance on that region. Specifically, in 2026, Indian refiners increased imports of Angola’s Kissanje, Nemba, and Dalia crude grades, alongside Nigeria’s Agbami and Usan crudes. This strategic decision underlines India’s commitment to establishing a robust energy supply system that includes a wider range of international partners.
Responding to Supply Chain Disruptions
The recent disturbances in the Strait of Hormuz—the principal shipping route for oil and gas—have further accelerated India’s plans to strengthen its energy supply chain. In 2024 alone, the country imported considerable volumes of LPG, primarily sourced from Gulf nations, reaffirming its historical dependence on these markets. However, the interruptions in shipping routes have spotlighted the vulnerabilities linked to such a narrow supply chain.
In light of these challenges, India is making concerted efforts to lessen its dependency on imported fuels. This includes looking towards the United States as a new supplier for LPG, with plans to obtain up to a quarter of its imports from there by 2027. In addition, the Indian government is advocating for consumers to shift towards piped natural gas solutions, thereby lessening reliance on imported cooking fuel.
These strategic moves not only signify a shift in sourcing practices but also open doors for energy suppliers in Africa and the broader Americas, expanding their potential roles in the global market. India’s actions reflect an ongoing endeavor to provide a secure, diversified, and resilient energy framework for the future.