Indian Oil Corporation (IOC), India’s largest refiner, has finalised an agreement with Algeria’s state-owned energy company Sonatrach to import liquefied petroleum gas (LPG) from 2027, as India seeks to diversify its cooking-gas supplies and reduce dependence on Middle Eastern sources.
Under the agreement, IOC is expected to receive one very large gas carrier of LPG every month, with each shipment carrying around 45,000–55,000 tonnes of propane and butane. The cargoes will be purchased on a free-on-board basis, according to trade sources.
A key attraction for IOC is pricing. Sources said Algerian LPG is currently priced below Saudi Aramco’s contract price, making Sonatrach an increasingly competitive supplier for Indian buyers.
The move also reflects India’s efforts to reduce its exposure to disruptions along the Strait of Hormuz. India has historically sourced a large share of its imported LPG from Gulf suppliers, including Saudi Arabia, Qatar, the UAE and Kuwait. Recent disruptions have prompted Indian oil companies to seek supplies from alternative markets.
India began importing LPG from Algeria in June, with preliminary trade-flow data indicating that around 110,000 tonnes could arrive in August. IOC had previously maintained a term supply agreement with Sonatrach before shifting more of its purchases towards Middle Eastern suppliers.
The Algerian deal forms part of a broader diversification strategy. Indian oil companies are also increasing purchases from the United States, while the country plans to source as much as 25% of its LPG imports from the US in 2027, according to trade sources. IOC, Hindustan Petroleum Corporation and Bharat Petroleum Corporation are also expected to jointly seek additional US LPG supplies.
For India, the expanded sourcing network could improve supply security by reducing reliance on a single geographic region. It also gives state-run refiners greater flexibility to take advantage of competitive international LPG prices while ensuring adequate supplies of cooking gas for the domestic market.