Feb. 27 (Bloomberg) -- Reliance Industries Ltd. and Essar Oil Ltd. cut liquefied petroleum gas supplies last month, causing a shortage of the cooking fuel in some Indian states, junior oil minister Dinsha Patel said.

State-owned marketing companies reported a shortfall due to reduced shipments, Patel said in written replies to questions in parliament yesterday. Reliance spokesman Paresh Chaudhry said India's most valuable company met its commitments.

India imports LPG to meet demand from households that pay 21 rupees a kilogram, or 36 percent less than Saudi Arabia's benchmark price. The shortage worsened this year because of transportation delays from Reliance's refinery in Jamnagar to the north, increased demand due to cold weather and panic buying amid concern that prices will rise, Patel said.

``This was caused mainly because of transportation problems, not merely because Reliance and Essar Oil supplied less,'' Mrinal Roy, executive director at Indian Oil Corp., the biggest state- run refiner and marketer, said in a telephone interview from New Delhi. ``The problem has now been resolved.''

Indian Oil, which coordinates cooking gas purchases for state-run oil companies, was to have received 238,000 metric tons from Reliance and 35,000 metric tons from Essar Oil in January. Supplies from Reliance fell short by 3,000 metric tons and from Essar by 18,000 metric tons, Roy said.

India's government has capped the price of LPG at 297 rupees for a 14.2 kilogram bottle in Mumbai, equal to about $525 a metric ton. Dhahran, Saudi Arabia-based Saudi Aramco, the largest supplier of liquefied petroleum gas to Asia, will charge $820 a ton for propane and $825 a ton for butane, the two varieties of LPG, in March.

Reliance Supply

About 20 percent of India's consumption of 11.9 million tons of cooking gas last year was met from Reliance's Jamnagar refinery, Roy said. The refinery is the world's third largest.

``There was no dip in LPG supplies from Jamnagar,'' Chaudhry said today in a phone interview from Mumbai, where the company is based. ``We supplied as per the plan. There was no shortfall whatsoever.''

Consumption of LPG in India grew 9.8 percent last December to about 390,000 barrels a day, according to data compiled by Bloomberg.

Essar Oil, India's newest refiner, said in an e-mailed statement it was unfair to blame the company for the shortfall. Essar supplied 13,400 metric tons in January, almost double its monthly average till December, it said.

Bharat Petroleum Corp., India's third-largest refiner, reported a fall in production last month after an unplanned shutdown of a unit, Patel said. LPG production at Indian Oil and Hindustan Petroleum Corp. was higher than planned for January, the minister said.

Indian Oil, Hindustan Petroleum and Bharat Petroleum are importing additional LPG in the three months to March 31 to meet increased demand, Patel said.

To contact the reporter on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net.

Last Updated: February 27, 2008 06:36 EST