The petroleum ministry has, for the first time ever, fixed maximum LPG (cooking gas) production targets for refineries and upstream companies across the country. That’s more than double India’s current domestic LPG output. The move comes as a direct response to the vulnerabilities exposed by the West Asia war, which disrupted imported cooking gas supplies.
Let’s break down this LPG safety net in detail and see whether it’s actually good news for the sector.
What’s Happening?
In an order issued on August 13, the Petroleum and Natural Gas Ministry set maximum LPG production levels for 21 refineries and upstream companies. Combined, their production potential works out to 63,810 tonnes per day. To put that in perspective, it’s over twice the domestic LPG production expected in FY25-26 and roughly 70% of the country’s daily consumption.
This framework comes through an amendment to the Petroleum Products (Maintenance of Production, Storage and Supply) Order, 1999. But here’s the catch: these targets only kick in when there’s an actual shortage or disruption in supply. They are not daily mandates in normal times.
India consumed 33.2 million tonnes of LPG in FY25-26, which translates to about 91,000 tonnes every single day. Domestic production covered just 13.1 million tonnes of that, roughly 35,900 tonnes per day. The rest, 21.3 million tonnes or about 58,400 tonnes per day, had to be imported. So more than 64% of the country’s LPG needs were riding on imports. That’s a massive dependency, and it’s exactly what the government is trying to address.
Reliance Gets the Biggest Target
Reliance Industries’ older Jamnagar refinery has been handed the largest target: 18,000 tonnes of LPG per day. This is the 33 million tonnes per year DTA (Domestic Tariff Area) refinery, meaning its production goes straight to the local market.
Beyond that, 18 government oil company refineries have a combined target of 31,470 tonnes per day. Russia’s Rosneft-backed Nayara Energy, with its 20 million tonne capacity Vadinar refinery, has been assigned 4,480 tonnes per day. And upstream gas producers like ONGC and GAIL together account for 6,460 tonnes per day of the target.
This order sets production levels for 18 public sector refineries, three private sector companies, and three upstream firms. After Reliance, BPCL’s Kochi refinery gets 4.80 KTPD and Nayara Energy gets 4.48 KTPD. Together, those three alone hold 27.28 KTPD of the total production potential.
Lessons From the West Asia Crisis
This whole thing started when the Iran war effectively shut down the Strait of Hormuz. That’s the route through which India received 90% of its LPG imports, mostly from countries like Saudi Arabia. When the supply chain got choked, the government had to scramble.
In March, refineries were ordered to divert streams meant for petrochemical production toward LPG production instead. Sales to industrial and commercial users were stopped. For domestic consumers, the refill booking frequency was increased, and households were pushed to shift to piped natural gas. It was a full-on emergency response.
At the peak of the crisis, domestic LPG production was ramped up to around 55,000 tonnes per day. Once supply conditions improved from mid-June, those emergency orders were gradually rolled back. Now, instead of ad hoc emergency directives, the new order sets facility-wise production levels that can be activated when needed.
What Does This Mean for Investors?
Under this framework, companies are required to maintain adequate infrastructure for LPG storage, evacuation, and transportation. They have also been told to adopt technical upgrades, like naphtha-to-LPG conversion and converting gasoline-based FCC units to petro-FCC units, so that existing refining infrastructure can squeeze out more LPG.
Here’s the bigger picture though. The government has given itself the authority to direct refiners, oil marketing companies, and upstream producers to boost LPG production for a specified quantity and duration, whenever it deems necessary in public interest. And violations come with penalties under the Essential Commodities Act, 1955. That’s a significant expansion of the government’s role in the operational decisions of companies like Reliance and Nayara.
What’s Next?
The government will update the production schedule every six months, on January 1 and July 1. New refineries and upstream companies will be added to the fold, as will any additional capacity that comes from technology and infrastructure upgrades.
Monitoring the implementation will be the Centre for High Technology, or any other authorised agency. The core idea is simple: if LPG imports get disrupted again, the country shouldn’t plunge into shortages and rationing like it nearly did. The West Asia crisis was a wake-up call, and the government has responded by bringing every refinery and upstream producer under one permanent framework.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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