LPG crisis explained: What Reliance’s new 18,000-tonne target means for you

New Delhi: The government has, for the first time, fixed maximum LPG production targets for individual public- and private-sector refineries and upstream companies as it seeks to build a domestic supply buffer and reduce the risk of shortages during disruptions to imports.

The Petroleum and Natural Gas Ministry, in an order issued on August 13, specified maximum LPG production levels for 21 refineries and upstream companies. Their combined production potential has been set at 63,810 tonnes a day — more than double India's domestic LPG output in the financial year ended March 31, 2026, and equivalent to around 70 per cent of the country's daily consumption.

The production limits will come into effect whenever there is a supply constraint.

Reliance Industries Ltd's older refinery at Jamnagar has been assigned the largest target, with a maximum LPG production level of 18,000 tonnes a day.

India consumed 33.2 million tonnes of LPG in 2025-26, or around 91,000 tonnes a day. Domestic production stood at 13.1 million tonnes, or about 35,900 tonnes a day, while 21.3 million tonnes was imported. This meant that more than 64 per cent of the country's LPG requirement was met through imports.

The high dependence on imports left India vulnerable when the West Asia conflict disrupted supplies through the Strait of Hormuz, the key sea route through which India received around 90 per cent of its LPG imports from countries including Saudi Arabia.

During the crisis, the government ordered refineries to divert streams used for petrochemicals production towards LPG to maximise domestic output. Supplies to industrial and commercial users were initially restricted, while domestic consumers faced longer refill booking intervals. LPG production rose to around 55,000 tonnes a day at the height of the crisis before emergency measures were gradually withdrawn as supplies improved from mid-June.

Facility-wise LPG production framework

The latest order goes beyond the emergency measures introduced during the crisis by establishing facility-wise production benchmarks. It also requires refiners and upstream companies to maintain adequate infrastructure for LPG storage, evacuation and transportation.

Eighteen refineries owned and operated by public-sector oil companies have been assigned a combined target of 31,470 tonnes a day.

Reliance's 33-million-tonne-a-year domestic-tariff-area refinery at Jamnagar, Gujarat, which supplies the domestic market, has been assigned a target of 18,000 tonnes a day. No target has been set for its 35.2-million-tonne-a-year export-oriented refinery at the same site.

Nayara Energy's 20-million-tonne-a-year refinery at Vadinar has been assigned a target of 4,480 tonnes a day. Upstream producers and processors, including ONGC and GAIL, have been given a combined target of 6,460 tonnes a day.

The order said: "It is hereby ordered that all public sector, joint venture and private sector oil refining companies, and upstream oil companies shall develop, augment and at all times maintain adequate infrastructure for storage, evacuation and transport of Liquefied Petroleum Gas (LPG) either by itself or through other entities viz railways or road tankers adequate for the specified quantities."

Companies have also been directed to implement technically and economically feasible measures to increase LPG production beyond current minimum levels.

The ministry said they should "implement all technically and economically feasible measures and technologies such as naphtha-to-LPG conversion, gasoline-based fluid catalytic cracking unit to petro-fluid catalytic cracking unit, or other upgrades, to maximise LPG production beyond current minimum producible quantities as specified in the Schedule".

Government can order production ramp-up

The government has empowered itself to direct oil refining companies, oil marketing companies and upstream oil companies to increase LPG production for specified quantities and periods if it considers such action necessary to ensure adequate domestic availability, equitable distribution and supplies at fair prices.

The order said, "if Central Government is of the opinion that it is necessary in public interest to ensure adequate availability, equitable distribution and availability at fair prices of domestic LPG, it may by itself or through Centre for High Technology or any other authorised agency, by order in writing, issue direction to oil refining companies, oil marketing companies and upstream oil companies to ramp up the LPG production levels for such quantity and period specified therein".

Companies will be required to ramp up production within the stipulated timeframe whenever such directions are issued.

The production schedule will be reviewed every six months, with updates to be made on January 1 and July 1 each year. The revisions will account for LPG production from new refineries and upstream companies, as well as additional output from existing facilities following upgrades to production technology and infrastructure.

(PTI)