Why is India Staring at an LPG Shortage?
Table of Contents
Relevance: GS Paper III – Indian Economy – Energy Security, Infrastructure – Issues related to Energy Security – Effects of Global Events on India’s Economy
For Prelims:
- Liquefied Petroleum Gas (LPG), Strait of Hormuz, Pradhan Mantri Ujjwala Yojana (PMUY), International Energy Agency (IEA), Strategic Petroleum Reserves (SPR), Underground LPG Caverns, Essential Commodities Act.
For Mains:
- Energy Security, Import Dependency, Strategic Energy Storage, West Asia Geopolitics, Global Supply Chain Disruptions, Energy Infrastructure.
Why in News?
India is facing a growing shortage of Liquefied Petroleum Gas (LPG) due to disruptions in global energy supply chains linked to the West Asia conflict involving Iran and Israel.
The crisis has slowed LPG shipments through the Strait of Hormuz, a key global energy transit route through which over 85% of India’s LPG imports pass. The shortage has led to long queues at LPG distribution centres, disruptions in supply to households and businesses, and warnings from industry groups such as the National Restaurant Association of India about potential closures of commercial establishments.
The situation has also highlighted a structural weakness in India’s energy infrastructure — the lack of long-term LPG storage capacity.
Background
India has significantly expanded LPG access over the past decade, particularly through welfare initiatives such as the Pradhan Mantri Ujjwala Yojana (PMUY).
While LPG consumption has increased dramatically, the country has not developed adequate strategic LPG reserves. Unlike crude oil and petroleum products, which have strategic reserves equal to about two months of consumption, LPG infrastructure in India is designed mainly for operational flow rather than long-term storage.
The International Energy Agency (IEA) has identified this lack of storage as a major infrastructural weakness in India’s energy system.
LPG Consumption and Import Dependence in India
India is currently the second-largest consumer of LPG in the world.
Rising Consumption
- Monthly LPG consumption: around 3 million tonnes
- Daily LPG consumption: about 80,000 tonnes
- More than 85% of LPG is used by households
Growth in Imports
- LPG imports increased threefold between 2011-12 and 2024-25.
- Current imports: around 20 million tonnes annually.
- Import dependency increased from 47% in 2015 to about 60% today.
By January 2026, imports had already crossed 18 million tonnes.
Role of PMUY
India now has about 33 crore domestic LPG connections.
- Around 10 crore connections were added after 2017 under the Pradhan Mantri Ujjwala Yojana (PMUY).
- The scheme provides deposit-free LPG connections to women in poor households and subsidises LPG usage.
PMUY significantly increased LPG adoption, improving health and reducing reliance on traditional fuels such as firewood and cow-dung.
However, the rapid expansion in LPG consumption was not matched with investments in storage infrastructure, increasing vulnerability to supply disruptions.
Structural Weakness in India’s LPG System
India’s LPG supply chain is structured around continuous import and distribution, rather than strategic storage.
Current Storage Capacity
India’s total LPG storage capacity can meet less than half of monthly consumption.
Most LPG storage exists in surface tanks at import terminals, such as Ennore.
Underground LPG Storage
India currently has only two underground LPG caverns:
| Location | Storage Capacity |
| Mangaluru | 80,000 tonnes |
| Visakhapatnam | 60,000 tonnes |
- Total underground storage capacity: 1.4 lakh tonnes.
- This is equivalent to less than two days of India’s LPG consumption.
- The Mangaluru cavern became operational only in 2025, despite rising LPG consumption over the past decade.
- The Ministry of Petroleum and Natural Gas (MoPNG) has also stated that no additional caverns are currently planned.
Role of West Asia Conflict and Strait of Hormuz
The ongoing West Asia conflict has disrupted global energy supply chains.
Importance of Strait of Hormuz
The Strait of Hormuz is one of the most critical maritime routes for energy trade.
- More than 85% of India’s LPG imports pass through this route.
- Any disruption in this narrow shipping lane quickly affects energy supplies.
Because India has limited LPG storage, disruptions in shipments have immediate effects on domestic supply.
Global Comparison: Energy Storage Systems
Many countries maintain large energy reserves to manage supply shocks.
Strategic Oil Reserves
- Countries often maintain strategic crude oil reserves equal to 90 days of consumption.
European Gas Storage
- Europe has developed significant gas storage capacity.
- Underground storage equals about 25% of annual gas consumption.
- Storage capacity is equivalent to 150% of annual LNG imports.
Following the Russia-Ukraine war, the European Union introduced rules requiring storage facilities to reach 90% capacity before winter.
India currently lacks similar strategic LPG storage policies.
Geological Options for LPG Storage Expansion
Experts have identified several geological formations in India suitable for underground LPG storage.
1. Peninsular Shield
This region consists of ancient granite, gneiss, and charnockite rock formations covering about 60% of peninsular India.
Both existing LPG caverns are located here.
Examples:
- Visakhapatnam cavern
- Located 162–196 metres below ground
- Built in Precambrian gneiss
- Mangaluru cavern
- Built in granitic gneiss
- Floor located 141 metres below sea level
These formations are considered stable and suitable for underground storage.
2. Deccan Traps
The Deccan Traps, a vast basalt plateau covering about 5 lakh sq km, present engineering challenges for storage.
Projects in this region have faced technical difficulties due to rock structure.
3. Salt Formations in Rajasthan
The Bikaner–Barmer belt contains halite (salt) formations suitable for creating salt caverns.
Salt caverns offer several advantages:
- Lower construction cost
- Faster construction
- Natural impermeability
- Quick injection and withdrawal of gas
Engineers India Limited (EIL) has partnered with Germany’s DEEP company to explore this technology.
4. Depleted Gas Reservoirs
Depleted gas fields in the following basins are also under study:
- Krishna-Godavari Basin
- Cambay Basin
- Mumbai Offshore Basin
These reservoirs could potentially serve as large underground storage sites.
Economic and Social Impact of LPG Shortage
The shortage has affected multiple sectors.
Household Impact
- LPG is the primary cooking fuel for most households.
- Supply disruptions have caused long queues at LPG distribution centres.
Hospitality Sector
The National Restaurant Association of India (NRAI) has warned that about 60% of restaurants could shut down if commercial LPG shortages persist.
Price Impact
Global oil prices have surged due to geopolitical tensions.
- US crude rose to $93.80 per barrel.
- Brent crude rose to $99.03 per barrel.
Such increases raise the cost of energy imports for India.
Government Response
The government has taken several emergency steps:
Essential Commodities Act
- LPG and CNG have been placed on the priority list under the Essential Commodities Act to prevent hoarding and stabilise supplies.
International Energy Agency Intervention
- The International Energy Agency (IEA) has announced the release of around 400 million barrels of oil from strategic reserves to stabilise global markets.
Diversification of LPG Imports
- India signed an agreement with the United States to import 2.2 million tonnes of LPG annually.
- However, US shipments take around 45 days to reach India, compared with much shorter travel times from the Persian Gulf.
Way Forward
To strengthen energy security, India must address structural weaknesses in LPG storage.
1. Build Strategic LPG Reserves
India should establish large underground LPG storage caverns similar to strategic petroleum reserves.
2. Diversify Import Sources
Reducing dependence on the Strait of Hormuz route will reduce vulnerability to geopolitical disruptions.
3. Expand Storage Infrastructure
Investment in salt caverns and depleted gas fields could significantly increase storage capacity.
4. Strengthen Energy Security Policy
India may consider introducing mandatory strategic gas storage requirements similar to oil reserves.
Conclusion
India’s LPG shortage reveals a deeper structural issue in the country’s energy system. While policies such as the Pradhan Mantri Ujjwala Yojana successfully expanded LPG access to millions of households, the lack of corresponding investments in strategic storage infrastructure has increased vulnerability to global supply disruptions. Strengthening storage capacity, diversifying imports, and developing strategic energy reserves will be essential for ensuring India’s long-term energy security.
UPSC PYQ
Q. Match List-I with List-II and select the correct answer using the code given below the Lists:
CDS-II (2016)
List-I (Strait)
A. Strait of Hormuz
B. Strait of Bab-el-Mandeb
C. Strait of Malacca
D. Strait of Sunda
List-II (Water Body)
- Java Sea
- Andaman Sea
- Red Sea
- Gulf of Persia
Code:
| A | B | C | D | |
| a) | 4 | 2 | 3 | 1 |
| b) | 1 | 3 | 2 | 4 |
| c) | 1 | 2 | 3 | 4 |
| d) | 4 | 3 | 2 | 1 |
Ans: d)
CARE MCQ
Q. With reference to Liquefied Petroleum Gas (LPG) in India, consider the following statements:
- India’s LPG imports account for about 60% of domestic demand.
- India currently has underground LPG storage caverns at Visakhapatnam and Mangaluru.
- Strategic LPG reserves in India can currently meet more than one month of consumption.
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (a) 1 and 2 only
Explanation
Statement 1 – Correct: LPG imports account for roughly 60% of India’s demand.
Statement 2 – Correct: India currently has underground LPG storage caverns at Visakhapatnam and Mangaluru.
Statement 3 – Incorrect: India’s underground LPG storage capacity equals less than two days of consumption, not one month.
