Our Bureau
New Delhi
Indian Oil Corporation (IOC) is finalising a deal with Algeria’s state-owned energy company Sonatrach to import liquefied petroleum gas (LPG) from 2027, in a move aimed at reducing India’s dependence on Middle Eastern supplies after disruptions around the Strait of Hormuz. The agreement is expected to involve monthly shipments of around 45,000-55,000 metric tonnes of propane-butane LPG, according to trade sources.
The proposed arrangement marks a significant step in India’s broader strategy to diversify its LPG sourcing and strengthen energy security. Algeria is emerging as an alternative supplier as geopolitical tensions and shipping disruptions in West Asia have exposed the risks associated with heavy dependence on Gulf routes.
India imports around 60% of the LPG it consumes, with nearly 90% of those imports previously routed through the Strait of Hormuz, according to government data. During the disruption earlier this year, the government directed refineries and petrochemical complexes to maximise LPG production by diverting propane, butane and related streams into the LPG pool. Domestic LPG output subsequently rose by about 25%, with supplies prioritised for households.
IOC had previously sourced LPG from Sonatrach but shifted its focus towards Middle Eastern suppliers. The company returned to Algerian imports in June as it sought alternative sources amid the changing geopolitical environment. Algeria’s pricing is also reportedly more competitive than Saudi Aramco’s, making the supply agreement commercially attractive.
The Algerian deal is part of a wider diversification push. India is also planning to source up to 25% of its LPG imports from the United States in 2027. US LPG imports had already crossed one million tonnes in June, highlighting the rapid expansion of non-Gulf supplies.
With LPG demand expected to recover, India’s shift towards suppliers such as Algeria and the US could reduce its vulnerability to future disruptions along the Hormuz route while creating a more diversified and resilient import network.