Indian Oil Seals Algerian LPG Deal for 2027

Indian Oil Corp (IOC) has finalized a crucial agreement with Algeria’s Sonatrach for the import of liquefied petroleum gas (LPG), set to commence in 2027. This strategic move signals India’s focused effort to diversify its energy sources and reduce reliance on Middle Eastern suppliers.

Strategic Shift in Sourcing

The deal directly addresses India’s vulnerability, particularly after recent disruptions to energy flows, including the blockade of the Strait of Hormuz. Such events previously led to rationing of LPG supplies within India, highlighting the urgent need for a broader import base.

• One very large gas carrier (VLGC) of LPG monthly will be supplied under the agreement.
• Each VLGC contains 45,000 to 55,000 metric tons of a propane and butane mix.
• Algerian LPG prices are reportedly more favorable than Saudi Aramco’s Contract Price, based on a free-on-board arrangement.

Expanding Global Energy Partnerships

Beyond Algeria, India has been actively increasing its LPG imports from the United States, further broadening its supply network. The nation aims to source up to a quarter of its total LPG imports from the U.S. by 2027.

• Three major state retailers, including IOC, Hindustan Petroleum Corp, and Bharat Petroleum Corp, are expected to issue a joint tender for these U.S. LPG imports.

This multi-pronged approach underscores India’s commitment to ensuring stable energy flows and consistently meeting its substantial domestic demand. The shift away from concentrated regional suppliers is a clear strategic imperative for the nation’s energy security.