New Delhi: The government has directed all oil refining companies operating in India to maximise the use of propane and butane streams for the production of Liquefied Petroleum Gas (LPG) and supply it exclusively to the three public sector oil marketing companies (OMCs) — Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) — according to an official order reviewed by Energy Watch.
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The emergency order, issued by the Ministry of Petroleum and Natural Gas on March 5, comes as geopolitical tensions escalate in West Asia and global energy supply routes face growing uncertainty.
The directive states that all oil refining companies must “maximise and ensure that Propane and Butane streams produced, recovered, fractionated or otherwise available with them are utilised for production of Liquefied Petroleum Gas (LPG) and make it available to the three Public sector OMCs viz. IOCL, HPCL and BPCL only.”
It further bars refiners from diverting these streams to petrochemical production or downstream derivatives. “All oil refining companies shall not divert, utilise, process, crack, convert or otherwise employ Propane or Butane streams for manufacture of petrochemical products or other such downstream derivatives,” the order states.
The ministry has also directed the public sector OMCs to ensure that the LPG procured under the order is supplied solely to domestic consumers. “All Public sector OMCs shall ensure that LPG so procured is supplied/marketed solely to consumers of domestic LPG only,” the order notes.
The directive takes effect immediately and will remain in force until further orders, with violations attracting action under the Essential Commodities Act and related regulations.
The order states that LPG is “an essential domestic fuel used by households for cooking across the country and uninterrupted supply thereof is necessary in the public interest.” It also notes that more than 99 percent of domestic LPG consumed in India is supplied or marketed to households by the three public sector OMCs — IOCL, BPCL and HPCL — underscoring the importance of ensuring adequate supply through these companies.
By directing refiners to prioritise LPG production and restricting diversion of feedstock to petrochemicals, the government appears to be safeguarding cooking gas availability during a period of heightened global supply uncertainty. The order comes days after state-run Petronet LNG and GAIL invoked force majeure citing disruption in LNG supplies due to the escalation in tensions in West Asia resulting in disruption of supplies through the Strait of Hormuz.
The order has been issued by the Petroleum Ministry under Section 3 of the Essential Commodities Act, 1955 and the Petroleum Products (Maintenance of Production, Storage and Supply) Order, 1999. Section 3 of the Essential Commodities Act empowers the Central government to regulate the production, supply and distribution of essential commodities to maintain their availability at fair prices and to prevent hoarding or disruption in supply chains.
The Petroleum Products (Maintenance of Production, Storage and Supply) Order, 1999 was issued under this law to regulate the production, storage and supply of petroleum products in order to sustain public life and protect consumer interests.
Under Clause 3 of the 1999 order, the government can direct oil refining companies to maintain specific levels of production of particular petroleum products. And Clause 5 allows the government to require oil marketing companies to supply petroleum products from their stocks to other installations or depots across the country and to direct refiners to make such products available for this purpose.
The government’s move comes against the backdrop of escalating tensions in West Asia following the assassination of Iran’s Supreme Leader Ayatollah Ali Khamenei and a sharp rise in military confrontation across the region.
The Strait of Hormuz — the narrow maritime passage between Iran and Oman — remains one of the world’s most critical energy chokepoints. A significant share of global crude oil and liquefied natural gas shipments passes through the strait each day.
For India, the route is particularly critical for LPG imports. Industry estimates indicate that around 80–85 percent of India’s imported LPG volumes are routed through the Strait of Hormuz, making the passage central to the country’s household cooking gas supply chain.
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Any disruption in tanker traffic through the strait could therefore directly affect LPG availability and pricing in India, particularly given the country’s high dependence on imports to meet domestic demand.