Indian Oil Corporation (IOC) has finalized a deal with Algeria’s state-run Sonatrach to import liquefied petroleum gas (LPG) starting 2027. The move aims to reduce India’s heavy dependence on Middle Eastern supplies after the Hormuz Strait disruptions caused price spikes and delivery delays earlier this year. State retailers are also looking at the United States as an additional sourcing option.
45,000-55,000 Tonnes Per Month From Algeria
Under the agreement, IOC will import approximately 45,000 to 55,000 metric tonnes of LPG every month through a large gas carrier. The cargo will primarily consist of a propane and butane mix used extensively for cooking across Indian households. The deal is structured on a free-on-board (FOB) basis, meaning IOC bears shipping and insurance costs after loading the cargo onto vessels.
Algerian Prices Cheaper Than Saudi Aramco
Sources told Reuters that Algeria’s LPG prices are lower than Saudi Aramco’s contract rates. IOC previously had a term agreement with Sonatrach but shifted to Middle East suppliers in recent years. The company has now returned to the Algerian firm to secure more competitive pricing for its growing LPG import requirements.
Joint US LPG Tender Also Under Consideration
State-run retailers including IOC, Hindustan Petroleum Corporation and Bharat Petroleum Corporation may issue a joint tender for LPG imports from the United States. This marks another step in India’s broader strategy to diversify its energy import sources beyond the traditional Middle East dominance.
Hormuz Strait Crisis Triggered Urgent Rethink
India has long relied on the Middle East for most of its LPG needs. However, supply disruptions in the Hormuz Strait earlier this year forced domestic LPG cylinder prices up sharply. The government also tightened booking and delivery rules to manage availability. Oil companies are now working to spread import sources across more countries to prevent future supply shocks and stabilize retail prices for consumers.
