India inks first-ever structured LPG supply contract with US; PSUs to import 2.2 MTPA from 2026

In a major achievement for India, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri has announced the country’s first structured contract to source liquified petroleum gas (LPG) from the US, marking a “historic step” as India, one of the largest and the world’s fastest growing LPG market, opens up to the United States. 

Under the agreement with the U.S., Indian oil PSUs, including Indian Oil, BPCL, and HPCL, will import 2.2 MTPA of LPG per year, which is 10% of the country’s annual imports.

“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% 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,” the Union minister said on X. 

The agreement, as per Puri, is based on using Mount Belvieu as the benchmark for LPG purchases. The purchase deal was secured after officials from these companies visited the US and engaged in discussions with major US producers over the last few months, which have now been concluded. 

Puri said India’s PSU oil companies have been providing LPG at the lowest global prices to women. “Even as global prices soared by over 60% last year, Modi Ji ensured that our Ujjwala consumers continued to receive LPG cylinders at just ₹500-550, whereas the actual cost of the cylinder was over ₹1100. Government incurred the cost of over ₹40000 crores last year to ensure our mothers and sisters did not feel the burden of rising international LPG prices,” he said.

Notably, the Union Cabinet in August approved a compensation package of ₹30,000 crore for public sector oil marketing companies, including Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), to offset under-recoveries on the sale of domestic LPG.

The compensation package, to be disbursed in 12 tranches, will be allocated by the Ministry of Petroleum and Natural Gas for the under-recoveries incurred on the sale of domestic LPG,” the release noted.

The international prices of LPG continue to remain high, and to insulate consumers from fluctuations in international LPG prices, the increase in cost was not passed by the government on to consumers of domestic LPG, which led to significant losses for the three OMCs.

The compensation allows the OMCs to continue meeting their requirements, such as crude and LPG procurement, servicing of debt, and sustaining their capital expenditure, ensuring an uninterrupted supply of LPG cylinders to households.

The government’s flagship scheme, PM Ujjwala Yojana, launched on May 1, 2016, provides clean cooking fuel (LPG) to poor households. As of July 1, 2025, there are about 10.33 crore PMUY connections across the country.