Government Official Warns of 3-4 Year Timeline for LPG Supply Restoration Amid Uncertainty Over Extent of Damage

Global LPG Supply Disruptions Persist, Restoration Uncertain

The ongoing disruption to global LPG supply chains is expected to take three to four years to recover, according to a senior government official. The uncertainty surrounding the extent of damage to production facilities in the region has cast a shadow over the timeline, with the official citing the high risk of permanent damage to critical facilities.

India, which relies heavily on West Asia for its LPG supplies, has been severely impacted by the blockade of the Strait of Hormuz and Iranian strikes on regional energy infrastructure. The country's LPG import dependence remains high, with approximately 60 percent of consumption met through imports. Nearly 90 percent of these supplies were routed via the Strait of Hormuz before the war broke out, but as of March 24, the share of Gulf imports declined to 55 percent, indicating both disruption and diversification.

Supply Disruption Projections

| Source | Pre-War Supply Share | Post-War Supply Share | | --- | --- | --- | | Gulf Imports | 90% | 55% | | Other Sources | 10% | 45% |

Even after rerouting and alternative sourcing, effective supply disruption could remain at 40-50 percent, according to an April report by Rubix Data Sciences and Vayana TradeXchange. The government is focusing on ensuring continuity of household supply while exploring alternative sourcing options to mitigate shortages.

To mitigate the impact of supply disruptions, the government is relying on alternative arrangements created during the COVID-19 pandemic. These include diversifying import sources, rerouting shipments, increasing domestic output, and managing demand. The focus would be on managing consumption patterns and ensuring that households do not face disruption.

Short-Term Supply Risks and Price Volatility

With annual LPG demand of around 33 million tonnes and storage capacity covering only about 15 days of consumption as of mid-March, the shift in sourcing raises short-term supply risks and exposure to price volatility. Prices of domestic 14.2 kg LPG cylinders have risen by Rs 60 since mid-March, while commercial cylinder prices have increased by Rs 115 over the same period.

India's reliance on Gulf imports has also increased its exposure to global price volatility and supply disruptions. The UAE, Saudi Arabia, Qatar, Kuwait, Bahrain, and Oman together supplied 92 percent of India's LPG, valued at $6 billion in FY25. The UAE, which has borne the brunt of Iran's attacks, accounted for 41 percent and Qatar 22 percent of the imports. The disruption has increased freight costs and insurance premiums, which are expected to inflate LPG costs.