India Mandates Propane, Butane for Domestic LPG Production; Curbs Petrochemical Use
The Indian government has directed all oil refining companies to prioritize propane and butane streams exclusively for domestic LPG production, effective March 5, 2026. This directive, issued under the Essential Commodities Act, aims to ensure uninterrupted household cooking fuel supplies amid high demand. Refineries are now barred from diverting these components for petrochemical or industrial uses. LPG produced must be supplied solely to public sector OMCs for domestic distribution, with strict penalties for non-compliance.
In a significant move to ensure energy security, the Indian Central government has mandated that all oil refining companies prioritize propane and butane streams for the production of Liquefied Petroleum Gas (LPG), effectively restricting their diversion for petrochemical and industrial uses. The directive, issued on March 5, 2026, under the Essential Commodities Act, 1955, and the Petroleum Products (Maintenance of Production, Storage and Supply) Order, 1999, aims to safeguard household cooking fuel supplies and ensure uninterrupted availability for millions of Indian homes. Refineries are now explicitly barred from processing or converting these streams for manufacturing petrochemical products or downstream derivatives. All LPG produced from these prioritized streams must be supplied exclusively to the three public sector Oil Marketing Companies (OMCs): Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited. These OMCs, responsible for over 99% of domestic LPG supply, are also tasked with ensuring this LPG reaches only domestic households. The decision comes amidst consistently high demand for cooking gas. While the directive may impact petrochemical output from certain refineries that historically used these streams as feedstock, the government underscores that the measure is in the larger public interest. The order came into immediate effect, with warnings of strict legal action for any violations, and will remain operational until further notice.
