The negotiations, occurring in opposition to the backdrop of the US tariff on Indian items, help the goal set by each international locations earlier this 12 months to extend their vitality commerce to $20 billion. This would come with India importing liquified petroleum fuel (LPG) from the US by way of time period contracts, and growing crude oil and liquefied pure fuel (LNG) imports.
“Indian OMCs are in talks, collectively, with at the very least a dozen LPG suppliers within the US. The negotiations are for provides beginning January subsequent 12 months, and the discussions are progressing properly,” one of many three individuals cited above stated. The individual added that though offers could also be signed individually, on condition that talks are occurring at a mixed degree, the character of offers can be largely the identical.
Targa, OneOk
A number of the main American LPG suppliers are Texas-headquartered Targa Assets and Enterprise Merchandise and Oklahoma-headquartered ONEOK. Queries emailed to the Union ministries of petroleum and commerce, the Indian oil advertising firms, and the US LPG suppliers went unanswered.
India historically imports most of its LPG from West Asian international locations together with Qatar, the UAE and Saudi Arabia by way of long-term contracts, whereas different main LPG importing international locations supply it from the US. The US to this point has been supplying India LPG in small volumes by way of spot offers, and that is the primary time the Indian firms might have a time period cope with US suppliers. Alternatively, China has been a significant purchaser of LPG from the US.
In India, LPG is used primarily for residential cooking, adopted by industrial and industrial functions. India imported LPG value $12.47 billion in FY25, 19.85% greater than $10.42 billion the earlier 12 months. In response to Ken Analysis, as of December 2024, the Indian LPG market was valued at $15 billion, with development backed by the federal government’s emphasis on use of LPG for cooking functions by way of the Pradhan Mantri Ujjwala Yojana.
Thaw?
The talks with the US corporations is seen as indicating a thaw in ties between the 2, whilst talks on the Bilateral Commerce Settlement stay lively however are caught on intractable points akin to dairy and agriculture. US president Donald Trump has additionally wared that India may face penalties if it continues buying petroleum merchandise from Russia.
“India is a big importer of LPG. US is a big producer of LPG which is produced as pure fuel liquids together with shale fuel. So, US could be a important provider of LPG to India,” stated Prashant Vasisht, senior vp and co-group head, company scores, ICRA Ltd. He added the worth of LPG is not going to be very completely different and will probably be aggressive in comparison with the West Asian LPG on a landed foundation in India.
In a bid to diversify import sources amid geopolitical tensions and regional instability in West Asia, Indian patrons are already forging new ties. State-run BPCL signed an annual contract with Norway’s Equinor to safe 550 kilotonne every year of propane and butane, lowering its reliance on the West Asian international locations. Reuters final month reported that India plans to supply about 10% of its cooking fuel imports from the US as a part of a broader effort to spice up vitality purchases to slim its commerce hole with Washington.
Commerce conflict ripples
In March this 12 months, because the tariff conflict flared between the US and China, a report by maritime consultancy Drewry instructed that if the US-China commerce conflict escalated, Saudi contract costs may entice a premium, with China doubtless participating Center Jap suppliers and forcing India to diversify its import sources, together with the US.
LPG utilized in India contains 60% butane and 40% propane. West Asian exports are higher fitted to this as they’re primarily butane-dominated, since their LPG manufacturing is a byproduct of oil processing. Alternatively, US provides are primarily propane-dominated, as LPG manufacturing within the US is the byproduct of pure fuel processing. In response to the Drewry report, Butane accounted for 52% of India’s LPG imports in 2024.
“India might supply the required propane from the US, which might be 40-50% of the composition and the butane might continued to be imported from the Gulf international locations,” an business govt stated on the situation of anonymity
LPG nation
As on 1 April, 2025, the three state-run oil advertising firms which dominate the LPG market in India, collectively have 32.97 crore lively LPG prospects within the home class who’re being served by 25,542 LPG distributors. Knowledge from the Petroleum Planning & Evaluation Cell (PPAC) exhibits these firms bought practically 31.2 million metric tonnes of LPG in FY25, out of which about 88.3% was bought within the home sector.
Ajay Srivastava, former Indian Commerce Service officer and founding father of the World Commerce Analysis Initiative (GTRI), stated, “These participating with US oil corporations for the deal ought to guarantee certainty of provide and aggressive pricing, because the US has overcommitted to supplying oil and fuel to varied international locations, however at present lacks satisfactory manufacturing of petroleum merchandise and LNG. The contract should assure provide certainty and embrace penalties for failure to ship on time.”
Nonetheless, a former authorities official, requesting anonymity, stated, “It’s a forward-looking transfer by each side, as such offers occur with the consent of the federal government, and this transfer may assist ease tensions and make it simpler to resolve among the sticking factors within the bigger settlement.”
Vessel dynamics
The Drewry report cited earlier stated the rise in import of American LPG would additionally impression the LPG vessel segments that India employs to import the product. Sometimes, India makes use of medium fuel carriers (MGC) to move LPG, because the nation has low storage capacities and most terminals are unable to cater to very massive fuel carriers (VLGCs) Nonetheless, upgrading the infrastructure in addition to altering provider international locations can result in modifications within the vessel employment patterns with VLGCs growing their share in India’s import combine with greater imports from the US.
India’s vitality imports from the US, largely crude, have already witnessed an uptick this 12 months. To make certain, India has already assured the US that it could ramp up vitality ties and enhance imports. After Prime Minister Narendra Modi’s assembly with Trump final month in Washington, overseas secretary Vikram Misri had stated that India goals to extend its purchases of US vitality within the close to future. Throughout prime minister Narendra Modi’s go to to the US in February, the US president Donald Trump stated that each the international locations have reached an “vital” settlement on vitality that may make the US one of many main suppliers of oil and fuel to India, “hopefully primary provider”.
Mint earlier reported that oil and fuel imports are rising as a key issue within the ongoing bilateral commerce talks between the US and India and India plans to extend the share of Western Texas Intermediate or WTI crude within the nation’s import basket, which may even entail setting a tariff charge quota for US crude.
Key Takeaways
- India is in talks with US corporations for cooking fuel provides beginning in 2026.
The transfer goals to diversify India’s vitality imports past its West Asian suppliers.
That is the primary time India might have a long-term LPG cope with the US.
The offers may assist thaw relations amid ongoing US-India commerce tensions.
Sourcing LPG from the US will impression India’s present transport logistics.
