India Looks to New Gas Sources to Ease LPG Shortage

Why in the News

Amid supply disruptions caused by the West Asia conflict, officials say India is turning to new sources of natural gas such as the United States and Norway to address the current shortage of cooking gas (LPG).

Key Developments

• India is facing a temporary shortage of LPG and LNG supplies.
• The government has increased domestic LPG production by about 10%.
• Oil refineries have been directed to prioritise propane and butane for LPG production.
  • This directive was issued by the Ministry of Petroleum and Natural Gas.

Diversifying Gas Imports

• India is exploring imports from: United States and Norway
• Earlier, a major share of LNG imports came from Qatar.

Price Changes

• Earlier LNG price: $6–8 per MMBtu
• Current price: around $15 per MMBtu
• At higher prices, imports from distant suppliers become economically viable despite longer shipping distances.

Supply Challenges

• Shipping LNG from the U.S. or Norway can take about two months.
• This may cause a short-term supply gap before new cargoes arrive.
• However, officials expect the shortage to be temporary.

Government Priority

• The government has prioritised domestic LPG supply for households over commercial users.
• To address concerns of hotels and restaurants, a committee of oil marketing companies (OMCs) has been set up to review requests for commercial LPG supplies.

Key Terms

• LPG (Liquefied Petroleum Gas)
  • Mainly composed of propane and butane.
  • Used widely as cooking fuel in households.
• LNG (Liquefied Natural Gas): Natural gas (mostly methane) cooled to −160°C to transport it in liquid form.

Significance for India

• India imports a large share of its energy requirements.
• Disruptions in West Asia affect fuel supply, prices, and energy security.
• Diversifying suppliers helps reduce dependence on a single region.