Home / Business and Economy / India Inks First-Ever Annual US LPG Contract, Reducing Gulf Dependence
India Inks First-Ever Annual US LPG Contract, Reducing Gulf Dependence
18 Nov
Summary
- India signs 1-year LPG supply deal with the US, 10% of annual imports
- Aims to diversify sources and reduce reliance on Gulf nations
- Deal supports India's commitment to increase energy purchases from the US
In a significant move, India has secured its first-ever annual cooking gas (LPG) supply deal with the United States. This agreement, signed by state-run energy companies, aims to diversify India's supply sources and reduce its overdependence on Gulf nations, a key vulnerability during regional flare-ups.
The one-year contract, set to commence in 2026, will see India import around 2.2 million tonnes per annum (MTPA) of LPG from the US Gulf Coast, accounting for close to 10% of the country's annual imports. This strategic shift is expected to bolster India's energy security and rebalance its trade relations with the US, amid ongoing negotiations with the Trump administration.
India currently imports two-thirds of the LPG it consumes, with Gulf suppliers, mainly Saudi Arabia, the UAE, and Qatar, providing more than 90% of those imports. The risk of relying on a single region has long been recognized, but the recent flare-up between Iran, Israel, and the US has finally pushed Indian companies to seek alternatives.
The new deal with the US offers India greater flexibility, as it allows US suppliers to ship one in every four cargoes from any other country if American cargoes become uneconomical. This move is expected to reduce India's trade surplus with the US and support its commitment to increasing energy purchases from the country.
