Govt relaxes LPG distribution curbs for industrial users as Hormuz reopens

The Centre has restored non-domestic LPG supplies to pre-conflict levels and partially resumed bulk LPG allocations as energy supplies improve following the reopening of the Strait of Hormuz

The government on Thursday relaxed restrictions on the distribution of liquefied petroleum gas (LPG) for industrial and commercial users as energy supplies improved after the reopening of the Strait of Hormuz following an interim agreement signed by the US and Iran to end the war.

 

The government has removed all sectoral restrictions on the supply of non-domestic packed LPG, restoring availability to pre-conflict levels. Supplies of bulk LPG, which had been suspended earlier amid the crisis, have also been partially resumed, with allocations now permitted at up to 50 per cent of consumers' pre-crisis consumption levels.

 

Non-domestic packed LPG is typically sold in 19-kg cylinders, while bulk LPG is stored in storage tanks used by commercial consumers.

   

The government has also reduced the diversion of C3 and C4 streams, which include propane, butane, propylene and butenes, for LPG production to enhance petrochemical output. C3 and C4 streams are hydrocarbons primarily used for the production of LPG and petrochemicals.

 

“Taking note of the improved indigenous LPG production and the projected availability of imported LPG cargoes, Government has also decided to reduce the diversion of C3/C4 streams to the LPG pool,” the Ministry of Petroleum and Natural Gas (MoPNG) said.

 

Amid supply disruptions triggered by the US-Iran war and the subsequent closure of the Strait of Hormuz, the government issued several orders under the Essential Commodities Act restricting LPG and liquefied natural gas (LNG) supplies for industrial users to ensure energy availability for domestic consumers.

 

The government, on March 9, had directed all refineries operating in the country to use the entire C3 and C4 streams for LPG production, which would be used solely for domestic consumers.

 

The decision resulted in limited availability of petrochemicals for a range of sectors dependent on petrochemical feedstock and intermediates. A month later, some critical sectors, including pharmaceuticals, chemicals and petrochemicals, and food and public distribution, were allocated minimum quantities of the hydrocarbon streams.

 

The government said the enhanced allocation of C3 and C4 streams for non-LPG uses will be implemented while ensuring that the availability of domestic LPG remains unaffected. Indian refiners' cumulative LPG production should be maintained at a minimum of 40,000 tonnes per day. During the US-Iran war, domestic LPG production was ramped up to a record 50,000-52,000 tonnes a day by Indian refiners to ensure cooking gas availability for domestic consumers.

 

The Centre for High Technology (CHT), an advisory body under the oil ministry, has been directed to issue organisation-wise allocations of the enhanced C3 and C4 streams for petrochemical and other critical sectors.

 

Oil marketing companies (OMCs) have been directed to continue maintaining comprehensive data on commercial and industrial LPG consumers to facilitate efficient planning and supply management, while a unified sectoral database will also be maintained for monitoring and operational coordination.

 

The government said it also remains committed to expanding piped natural gas (PNG) connectivity. Commercial and bulk consumers that have already migrated to PNG will continue to do so, while other eligible LPG consumers having access to the PNG network, or those in the process of shifting to PNG, will be progressively transitioned to PNG in coordination with city gas distribution (CGD) entities, it added.

 

The oil ministry has coordinated with the chief secretaries of all states and Union Territories (UTs) for the smooth implementation of the revised supply arrangements.