Historic LPG Agreement with the United States

India has signed a one-year contract to import 2.2 million tonnes of LPG per annum from the United States, marking a historic step to stabilize domestic fuel supplies. Officials described the agreement as a crucial measure to protect households from fluctuations in global LPG prices.

Union Minister Hails the Initiative

Union Petroleum and Natural Gas Minister Hardeep Singh Puri called the deal a “historic moment in India’s history”, emphasizing its importance in diversifying India’s energy basket.
“India has now opened its doors to America,” Puri tweeted, highlighting that the agreement ensures safe and affordable LPG supplies for the domestic market.

Contract Details and Pricing

The LPG will be sourced from the US Gulf Coast. Pricing is pegged at 3.5 percent of the average of Platts MEC US Gulf Coast Conventional Naphtha FOB and the Argus Propane Far East Index (FEI) under a reassessed formula for March 2020 – April 2021 lifting, according to Indian Oil Corporation (IOC).

Negotiations Led by Public Sector Oil Companies

The deal follows negotiations by IOC, Bharat Petroleum (BPC), and Hindustan Petroleum (HPC) with top US oil companies. Two recent meetings in the United States finalized the contract, ensuring no supply disruptions for domestic consumers.

Impact on Consumers and Subsidy Burden

Global LPG prices surged over 60% last year, compelling the Indian government to absorb ₹40,000 crore in subsidies to keep Ujjwala scheme cylinders affordable at ₹500–550. The new US supply is expected to further stabilize prices, benefiting millions of households, particularly rural women.

Broader Significance for Indo-US Energy Relations

The agreement is also being closely monitored as a potential signal of strengthening Indo-American energy ties. Analysts suggest it could influence future contracts and help India move toward energy self-sufficiency while maintaining affordable LPG for its citizens.

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