Government eases restrictions on LPG sales to commercial users as crisis eases in West Asia | Today’s news

New Delhi: The government on Thursday eased restrictions on the sale of liquefied petroleum gas (LPG) to commercial users, amid expectations of a potential peace deal between the US and Iran that could restore energy flows through the Strait of Hormuz.

The move is expected to bring relief to restaurants, canteens, hotels and other industries using LPG as well as pharmaceutical, petrochemical and allied industries.

Restrictions on bulk supply of LPG – usually used by large industries – have been eased to 50% of pre-crisis consumption levels, according to a June 25 letter by Petroleum Minister Neeraj Mittal to chief secretaries of states and Union territories.

“As you are aware, during the period of supply disruptions arising from the crisis in West Asia, the supply of commercial bottled LPG was restricted to ensure continuous availability of LPG to domestic consumers. It has now been decided to remove all sectoral restrictions on the supply of non-domestic bottled LPG and restore them to pre-crisis levels,” the letter said.

Stopping in March

The government halted supplies of liquefied petroleum gas for commercial use in March as the US-Israeli war with Iran escalated, disrupting fuel supplies through the Strait of Hormuz, which handles about 20% of the world’s traded energy. Thereafter, stocks were gradually restored to around 80% of pre-war levels, with allocations decided on the basis of user requests by a committee of state officials of the Oil Marketing Company (OMC).

However, domestic LPG booking restrictions remain in place. In March, the ministry mandated minimum refill intervals of 25 days in urban areas and 45 days in rural areas. No such curbs existed before the crisis in West Asia.

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To increase domestic production of LPG, the government also issued orders under the Essential Commodities Act that required C3-C4 streams to be used exclusively for LPG production, diverting it from petrochemical and other downstream uses. In the oil and petrochemical sector, C3 and C4 streams refer to specific groups of light hydrocarbon gases separated during oil refining and natural gas processing, which can also be used for LPG production.

In view of improved domestic LPG production and anticipated availability of imported LPG cargo, the government has also decided to limit the diversion of C3/C4 flows to the LPG pool. Expanded allocation of C3-C4 streams for non-LPG uses will be implemented, ensuring that domestic LPG availability remains intact and total local LPG production is maintained at at least 40,000 tonnes per day.

Required data

However, the ministry said all commercial and industrial consumer data must continue to be recorded by oil companies in their databases. A unified database can be maintained industry-wise across the three OMCs – Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, Hindustan Petroleum Corp Ltd.

Further, commercial and bulk customers who switched to piped natural gas (PNG) will remain on PNG, the Ministry of Petroleum and Natural Gas (MOPNG) said.

“If other LPG customers can access PNG and can migrate to PNG or are in the process of migrating to PNG local network, they will be permanently transferred to PNG. OMC will ensure that this transition to PNG continues in conjunction with city gas distribution (CGD) entities. The reporting format will be forwarded to OMC and CGD entities to submit MOPNG,” the ministry added.

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LPG supplies have been severely disrupted due to the West Asian conflict and the closure of the Strait of Hormuz. India meets about 65% of its annual LPG demand of 33 million tonnes through imports, spending nearly $11 billion. Before the conflict, India obtained approximately 90% of its LPG import volume from West Asia, so its supply chain was highly concentrated. Within months, however, he quickly turned to alternative suppliers. As a result, West Asian supplies to the world’s second-largest LPG importer fell to less than half of pre-war levels in June.

Steady increase

India has steadily increased its purchases of US cooking gas as the government steps up efforts to diversify imports after conflict in West Asia disrupted supplies and triggered emergency curbs on sales of the fuel. The US emerged as India’s top LPG supplier in March, selling 435,081 tonnes, as the widening war in West Asia disrupted shipping through the key Strait of Hormuz and triggered an unprecedented global energy crisis.

Since then, Washington has remained New Delhi’s main supplier of LPG, with India often turning to spot purchases of US cargoes, which are more expensive than traditional West Asian supplies.

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The easing of restrictions comes amid calls for curbs on the sale of petroleum products. The government recently limited the purchase of diesel at retail gas stations to 200 liters per customer per day.

The United Petroleum Dealers Association, representing gas stations in 11 states, recently wrote to the department that it wants the standard relaxed because the restrictions could disrupt the supply chain.