Clean Fuel Focus in India May Open Door for U.S. LPG Imports

Clean Fuel Focus in India May Open Door for U.S. LPG Imports

  • India raises free gas connections target by 60 percent
  • LPG demand in India seen growing by 1 million ton in 2018, FGE

Liquefied petroleum gas (LPG) cylinders stacked at a depot in Mumbai

Photographer: Dhiraj Singh/Bloomberg
Photographer: Dhiraj Singh/Bloomberg

India’s increased focus on cleaner cooking fuel may open the door for imports of liquefied petroleum gas from the U.S., according to Facts Global Energy.

The world’s second-largest importer of the fuel raised its target for providing free cooking gas connections to the poor by 60 percent to 80 million families, Finance Minister Arun Jaitley said in his budget speech on Thursday.

“As LPG demand in India increases, we may see U.S. LPG cargoes coming to India. It may happen this year or next," said Ong Han Wee, the Singapore-based head of the LPG team at Facts Global. “Aside from Iran, the supply growth will remain flat in the Middle East. India import requirements may eventually be greater than what Middle East can supply.”

The oil and gas consultancy estimates LPG demand in India will grow by a million tons in 2018. Consumption expanded more than 8 percent to nearly 23 million tons last year, with imports making up more than half those requirements.

Shipments have surged in the past two years under a government program to provide free LPG connections to women from families living below the poverty line. That’s helped the nation overtake Japan as the world’s second-largest importer of LPG, still trailing China.

Most of India’s LPG purchases are from Saudi Arabia, Qatar, Oman and Kuwait. The country got its first cargo of crude and ethane from the U.S. last year and of liquefied natural gas the year before that.

Prime Minister Narendra Modi’s administration is attempting to reduce the use of polluting fuels such as wood and cow dung, which cause 1.3 million premature deaths in India every year, according to the World Health Organization.

  • 30.5 million new connections were given under the plan by October 2017
  • The government aims to meet its target of 50 million connections by the coming December, said Ashutosh Jindal, joint secretary of marketing at India’s oil ministry
    • 30 million more will be given by March 2020

“With the expansion, we will be able to extend cleaner fuel to almost 100 percent of the poor households in the country,” Jindal said.

— With assistance by Debjit Chakraborty