‘Create 30-Day LPG Reserves’: Govt To OMCs Amid West Asia Crisis, LPG, CNG, Petrol, Diesel Supply Concerns

As the West Asia crisis has exposed India's vulnerability to global energy supply disruptions, the central government has asked oil marketing companies (OMCs), Indian Oil, Bharat Petroleum, and Hindustan Petroleum, to work on a plan to maintain LPG reserves sufficient to meet at least 30 days of demand.

The proposal to maintain 30 days of LPG reserves is in its initial stage and may require modifications and approvals before reaching its final draft. While hinting at the 30-day LPG reserve plan, Petroleum Ministry Joint Secretary Sujata Sharma said the proposal is in its early stages and declined to comment on the timelines for creating these reserves.

Meanwhile, compressed natural gas (CNG) prices increased in Mumbai, Thane, and Navi Mumbai for the second time in a month on Saturday, May 30.

LPG Storage Plan: What We Know So Far

There are speculations that the additional LPG supply storage is expected to be built using underground caverns or in overground tankage. However, there is no official confirmation regarding the same. The LPG storage layout plan will be chalked out by the OMCs depending on the cost considerations and feasibility.

LPG Supply Disruption Due To West Asia Crisis

The recent move to expand storage capacity for LPG came as crores of Indians rely on it for their household needs. The cooking gas was even promoted in rural parts of India as a safer alternative to firewood. With the West Asia crisis, disrupting LPG supply in India, more than 33 crore Indian households are facing the heat of the US-Israel war on Iran.

The creation of LPG storage reserves will be planned on the lines of India's existing strategic crude oil reserves. While India has strategic petroleum reserves for crude oil, it has none for LPG and liquefied natural gas (LNG)

India's Dependency on LPG Imports

LPG and crude oil make up a huge chunk of Indian imports. Nearkly 60% of LPG supplied in Indian households is imported from Middle Eastern countries. The disruption has forced India to ration LPG supplies to industrial and commercial consumers. The West Asia crisis also led to one of the steepest LPG price hikes in India last month. To curb LPG cylinder hoarding, the government tightened its crackdown on black marketing and also increased the minimum gap between LPG refill bookings by households.

Refineries Increase LPG Production

Domestic refineries have also maximised domestic LPG production from the crude to partly offset the loss in imports. Meanwhile, refiners are scrambling for LPG cargoes from alternative geographies like the US, Australia and Russia. As refiners are also focusing in boosting domestic production, LPG produced in India can now meet nearly 70% of the domestic demand, which used to be 40% before the Iran-US war.