The agreement covers about 10 per cent of India’s LPG imports, making it the first structured US supply contract.
In a first for India, Hardeep Singh Puri, Union Minister for Petroleum and Natural Gas, on Monday announced that India’s government-owned oil majors have successfully concluded a one-year structured contract to import around 2.2 million tonnes per annum (MTPA) of liquified petroleum gas (LPG) from the US Gulf Coast for the contract year 2026.
The figure represents close to 10 per cent of India’s annual LPG imports and marks the first such structured US LPG contract for the Indian market.
Taking to the microblogging site X, Puri noted, “A historic first! One of the largest and the world’s fastest growing LPG market opens up to the United States.”
While some geopolitical analysts may see this as India’s attempt to ease US concerns about increased energy imports from sanctioned Russia, the minister said the latest deal is part of the country’s efforts to secure affordable and reliable LPG supplies by diversifying its sourcing options. A team of officials from IndianOil, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) had visited the US from July 21-24 to negotiate with major US producers.
“This purchase is based on using Mount Belvieu as the benchmark for LPG purchases and a team of our officials from @IndianOilcl, @BPCLimited & @HPCL had visited the US and engaged in discussions with major US producers over the last few months, which have been concluded now,” Puri added in the X post.
Mount Belvieu benchmark links LPG prices against the US Gulf Coast hub, the world’s largest storage and trading centre for natural gas liquids, ensuring transparent and globally recognised price discovery.
Diversified Energy Security
India, the world’s third‑largest energy importer, has diversified oil and gas sourcing since 2022, drawing supplies from Russia, Saudi Arabia and Iraq. In FY2024‑25, Russia topped the list with $67.15 billion in crude imports, while West Asia—chiefly Saudi Arabia and Qatar—continued to supply more than half of India’s LPG needs.
In the aftermath of US President Donald Trump’s tariff war on India, Washington is keen to see New Delhi also buy oil and gas from its companies. Besides, India and the US have been trying to hammer out a trade deal, with a resolution expected soon. India had a $41 billion trade surplus with the US in FY2024-25.
Puri further stated that under the leadership of Prime Minister Narendra Modi, government-owned oil companies have ensured households across the country receive LPG at the lowest global prices. Even as global LPG prices surged by more than 60 per cent last year, beneficiaries of the government’s Ujjwala scheme continued to receive cylinders at a subsidised price of about ₹500-550, despite the actual cost exceeding ₹1,100.
The Central Government absorbed the burden, incurring an expenditure of over ₹400 billion in the previous year to shield families from the impact of rising international LPG prices.
– Manish Pant