India Directs Refiners To Prioritise LPG Production For IOC, BPCL And HPCL

The government has directed oil refiners in India to maximise the production of liquefied petroleum gas (LPG) using propane and butane and ensure that the fuel is supplied only to three state-run oil marketing companies - Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), according to a government order.

The directive, issued on Thursday, also instructs refiners not to divert propane and butane for petrochemical manufacturing and instead prioritise their use for LPG production. The order further states that the three public sector oil companies must sell the LPG exclusively for domestic consumption.

LPG is used in most Indian households as a primary source of cooking fuel. It is a mixture of propane and butane gases, and the oil marketing companies distribute it across the country.

Government Order On Refiners

The order requires refiners operating in India to maximise the availability of LPG by adjusting the use of propane and butane in refining and processing activities.

Propane and butane are key feedstocks used both in LPG production and petrochemical manufacturing. The government directive specifically asks the refineries to stop using these inputs in the production of petrochemicals and instead use them in the production of LPG.

The directive is given to all the refineries in the country, both in the public and private sectors.

According to the order, the LPG produced from these inputs must be supplied to IOC, BPCL and HPCL. These three public sector companies collectively manage the majority of the distribution of LPG throughout the country through their network of distributors.

Domestic Distribution Requirement

The directive also states that the LPG distributed to the three oil marketing companies should only be used for domestic purposes.

India boasts one of the highest numbers of LPG consumers worldwide, with millions of people depending on the fuel for their cooking needs. This is due to the increased distribution of the fuel through government schemes and subsidies over the past decade.

The instruction ensures that the LPG generated through the increased usage of propane and butane is only used for domestic purposes through the government distribution schemes.

IOC, BPCL, and HPCL collectively manage the majority of the distribution of LPG throughout the country.

LPG Composition And Supply

Liquefied petroleum gas is primarily a mixture of propane and butane, both of which are hydrocarbon gases obtained during crude oil refining and natural gas processing.

These gases can also be used as feedstock for petrochemical products, making them an important industrial input.

The government directive has given priority to the consumption of these hydrocarbons for LPG, as opposed to petrochemicals. Through the regulatory framework established by IOC, BPCL, and HPCL, the distribution of LPG is managed, thereby ensuring that the needs of domestic consumers are satisfied using the current infrastructure.