Government asks oil companies to build 30-day LPG reserves amid Hormuz supply risks

📌 Summary:

• West Asia war (US-Iran conflict) has tightened LPG supplies; government has asked PSU OMCs — IOCL, BPCL, HPCL — to chalk out a plan for strategic LPG reserves covering at least 30 days of demand, over and above regular commercial stocks

• Announced by Petroleum Ministry Joint Secretary Sujata Sharma on Friday (May 29, 2026); OMCs are working on storage modalities

• Rationale: India is the world''s second-largest LPG consumer (~30 million tonnes/year); ~60% of LPG is imported and ~90% of those imports come from Middle East producers — Qatar, Saudi Arabia, UAE — almost all routed through the Strait of Hormuz

• Strategic context: India already has Strategic Petroleum Reserve (SPR) of ~5.33 MMT crude (Vizag, Mangalore, Padur); but no statutory LPG reserve so far — current LPG storage is just ~15-20 days of operational cover at OMC terminals

• Mechanism options being explored: build dedicated underground LPG caverns (similar to SPR), expand pressurised surface storage at coastal terminals (Mundra, Pipavav, Kochi, Ennore, Haldia), and pre-position cargoes via long-term offtake contracts

• Costs & timelines: 30-day cover would need ~2.5-3 MMT incremental storage — multi-thousand crore capex over 3-5 years; will require land, environment clearance and safety upgrades given LPG''s flammability

• Wider linkages: complements PM Ujjwala Yojana (PMUY) coverage of ~10.3 crore connections, where any supply shock would hit poor households hardest; insulates LPG subsidy bill from price spikes

🎯 UPSC Relevance: GS3 — Energy security; infrastructure; strategic reserves; vulnerability of supply chains to geopolitical shocks; PSU role in critical sectors

📝 Prelims Facts:

• India''s LPG import dependence: ~60% of consumption
• ~90% of LPG imports come via Strait of Hormuz from Middle East
• Strait of Hormuz handles ~20-30% of global oil & LNG trade
• India''s Strategic Petroleum Reserve (SPR): Vizag, Mangalore, Padur (~5.33 MMT crude)
• PMUY connections: ~10.3 crore
• OMCs involved: Indian Oil Corporation (IOCL), Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL)

🔑 Key Term: Strategic LPG Reserve — government-mandated buffer stock of liquefied petroleum gas to insulate the domestic market from supply disruptions; analogous to Strategic Petroleum Reserve but for cooking gas.