India signs 1-year deal to import 2.2 million tonnes of LPG from US

Indian state-run oil companies have signed a one-year deal to import cooking gas LPG from the United States in 2026, marking a push by New Delhi to expand energy purchases from Washington.

The move is seen as an attempt to narrow India’s trade surplus with the US — a sticking point for President Donald Trump, who has slapped a 50 per cent tariff on Indian goods entering America.

“Indian PSU oil companies have successfully concluded a one-year structured contract to import around 2.2 million tonnes of LPG from the US Gulf Coast for the contract year 2026,” an official statement said on Monday.

The quantity contracted is close to 10 per cent of India’s annual LPG imports and marks the first such structured US LPG contract for the Indian market.

While India is either self-sufficient or has surplus production in most fuels like petrol, diesel and jet fuel, it imports about 65 per cent of its LPG consumption of 31 million tonnes. In 2024, about 90 per cent of the 20.4 million tonnes of LPG imports came from the UAE, Qatar, Kuwait and Saudi Arabia.

It sporadically imported cargos from the US but this is the first time it has entered into a structured contract.

State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) will import about 48 very-large gas carriers of LPG in 2026. The supplies will be made by super majors Chevron, Phillips and TotalEnergies Trading SA.

India has offered to raise energy imports from the US as part of the bilateral trade deal that has been under discussions for the past couple of months. New Delhi buys about 8 per cent of its crude oil — the raw material for making petrol and diesel — from the US.

In the first half of 2025, India imported about 271,000 barrels per day (bpd) of US crude, up 51 per cent from 180,000 bpd in H1 2024.

Scope for raising crude imports from the US is limited given that shipments take 45-day sea voyage to reach Indian shores — a period during which ships can make six sorties from the Middle East.

Oil Minister Hardeep Singh Puri took to X to announce the LPG deal.

“A historic first! One of the largest and the world's fastest growing LPG markets opens up to the United States,” he said.

“In our endeavour to provide secure affordable supplies of LPG to the people of India, we have been diversifying our LPG sourcing.  In a significant development, Indian PSU oil companies have successfully concluded a 1-year deal for imports of around 2.2 MTPA LPG, close to 10 per cent of our annual imports — for the contract year 2026, to be sourced from the US Gulf Coast — the first structured contract of US LPG for the Indian market,” he said.

This purchase is based on using Mount Belvieu as the benchmark for LPG purchases, he said adding a team from the three PSUs had visited the US and engaged in discussions with major US producers over the last few months, which have been concluded now.

He touted poor Ujjwala consumers — who make up for a third of all LPG users in the country — receiving cooking gas cylinders at just Rs 500-550 while the actual cost was over Rs 1,100.

“Government of India incurred the cost of over Rs 40,000 crore last year in order to ensure our mothers and sisters did not feel the burden of rising international LPG prices.”

The price of LPG for non-Ujjwala users currently is Rs 853 per 14.2-kg cylinder.

For the US contract, the pricing shift — using Mount Belvieu as a benchmark — brings greater transparency and global linkage into India’s procurement model. For consumers, this diversification strengthens the ability to shield households from global price spikes.

“The minister emphasised that this new sourcing arrangement for 2026 is another step in strengthening India’s energy security while ensuring affordable access to clean cooking fuel for millions of households,” the statement added.