Centre Orders Oil Marketing Companies to Hold 30-Day LPG Strategic Reserves

The Union Petroleum Ministry has directed state-owned oil marketing companies — Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum — to build additional liquefied petroleum gas (LPG) storage and maintain reserves equal to at least 30 days of national demand. The instruction was confirmed on 29 May 2026 by Sujata Sharma, Joint Secretary in the Petroleum Ministry, who said the companies have been asked to draw up a plan for the strategic reserves over and above their regular commercial inventories.

The decision follows three months of disruption in West Asia, which has periodically choked shipping through the Strait of Hormuz. About 40 per cent of India's crude oil, 65 per cent of its natural gas and an overwhelming 90 per cent of its LPG imports originate in Gulf countries. While crude and LNG flows have been re-routed through alternative supplies, LPG cargoes from West Asia are harder to substitute at short notice because the global spot market for LPG is thin and Indian household consumption is concentrated in cylinder form.

India is the world's second-largest LPG consumer after China. The Pradhan Mantri Ujjwala Yojana has added more than 10 crore connections since 2016 and rural penetration of clean cooking fuel is now above 95 per cent. Any sustained shortage would therefore hit kitchens, small commercial users and industries simultaneously, making the cushion of a month's demand a critical resilience measure.

Beyond storage, the ministry is also working on diversifying sources of supply, increasing domestic LPG production from refineries and expanding the propane and butane import infrastructure on the east coast. The Centre had earlier eased rules around surrender of LPG connections and allowed reconnection to keep coverage stable while it reviews the subsidy and supply architecture in light of the West Asia situation.