LPG Supply Risks in India: Rising Demand and Limited Storage Capacity

Why in the News ?

India may face a potential Liquefied Petroleum Gas (LPG) supply shortage due to rapidly rising consumption and heavy reliance on imports without adequate strategic storage capacity.

A significant portion of India’s LPG imports passes through the Strait of Hormuz, making supply chains vulnerable to geopolitical disruptions in West Asia.

Energy analysts and the International Energy Agency have highlighted that India’s LPG system is designed mainly for continuous operational flow rather than long-term stockpiling, exposing the country to supply risks during disruptions.

Background: Growing Role of LPG in India’s Energy System

Liquefied Petroleum Gas has become one of the most important household fuels in India, replacing traditional fuels such as firewood, dung cakes, and kerosene.

Government initiatives aimed at clean cooking and improved public health have significantly expanded LPG access across the country.

The most notable initiative has been the Pradhan Mantri Ujjwala Yojana, which provided deposit-free LPG connections to poor households.

While these efforts improved energy access and environmental outcomes, they also rapidly increased LPG demand and import dependence.

Rising LPG Imports in India

India’s LPG imports have increased sharply over the past decade.

Key Trends

• LPG imports have tripled, reaching around 20 million tonnes between 2011–12 and 2024–25.
• Imports currently meet around 60% of India’s domestic LPG demand.
• Import dependence has risen from 47% in 2015 to about 60% today.

India consumes roughly 3 million tonnes of LPG every month, making it the second-largest LPG consumer globally.

However, the country’s existing storage facilities can meet less than half of the monthly requirement, leaving the system vulnerable to supply disruptions.

Most storage is located at import terminal tanks, such as those at Ennore Port, which are designed mainly for short-term operational storage rather than long-term reserves.

Inadequate Strategic LPG Reserves

Unlike crude oil, where India maintains strategic reserves covering about two months of consumption, LPG storage capacity is extremely limited.

India currently has only two underground LPG storage caverns:

• Mangaluru
• Visakhapatnam

Together, these caverns can store around 1.4 lakh tonnes of LPG, which is equivalent to less than two days of national consumption.

The Mangaluru cavern, with a capacity of 80,000 tonnes, alone equals approximately one day’s consumption.

This limited reserve makes the LPG supply system highly vulnerable to disruptions in global supply routes.

Growth in Domestic LPG Consumption

India’s daily LPG consumption is estimated at around 80,000 tonnes.

More than 85% of LPG is used by households for cooking purposes.

Currently, the country has about 33 crore domestic LPG connections, including around 10 crore connections added since 2017.

This rapid expansion reflects the government’s push for clean cooking energy and improved living standards.

Role of the Ujjwala Scheme

The Pradhan Mantri Ujjwala Yojana has been one of the most transformative social welfare schemes in India’s energy sector.

Key Objectives

• Provide deposit-free LPG connections to poor households
• Replace traditional fuels like firewood, coal, and kerosene
• Reduce indoor air pollution and health risks

While the scheme has significantly improved energy access and environmental outcomes, it has also contributed to the rapid increase in LPG demand and import dependence.

Import Diversification Efforts

• To reduce reliance on West Asian suppliers, India has begun exploring alternative LPG import sources.
  • For instance, India has signed an agreement with the United States to import about 2.2 million tonnes of LPG annually.
• However, imports from the U.S. take about 45 days to reach India, compared to much shorter shipping times from the Persian Gulf region.
• This longer supply chain limits the ability to respond quickly during emergencies.

Underground Caverns as a Storage Solution

• Experts suggest that expanding underground LPG storage caverns could significantly improve India’s energy security.
• Underground caverns allow countries to store large volumes of gas safely for extended periods and ensure supply continuity during disruptions.

Global Practices in Gas Storage

Several countries have developed extensive underground gas storage infrastructure.

In Europe, underground storage facilities play a crucial role in maintaining energy security.

Key features include:

• Storage capacity equal to about 25% of annual gas consumption
• Storage volume equivalent to around 150% of annual LNG import volumes

After the Russia–Ukraine War began in 2022, the European Union mandated that gas storage facilities must be filled to at least 90% capacity before winter to prevent shortages.

Geological Zones Suitable for Storage in India

Expanding underground storage in India requires suitable geological formations.

Peninsular Shield

The Peninsular Shield is considered the most suitable region for underground LPG storage.

It consists mainly of stable granite and gneiss rock formations, which are ideal for constructing storage caverns.

Existing LPG caverns at Visakhapatnam and Mangaluru demonstrate the feasibility of such infrastructure.

Deccan Traps

The Deccan Traps, a vast basalt plateau across western and central India, also offers potential for storage.

However, basalt formations present greater engineering challenges for cavern construction.

Some projects designed by Engineers India Limited have faced difficulties due to geological complexities.

Salt Caverns in Rajasthan

Salt formations in the Bikaner–Barmer Basin in Rajasthan present another promising option.

Salt caverns have several advantages:

• Cheaper and faster to build
• Naturally impermeable
• Allow rapid injection and withdrawal of gas

To develop this technology, Engineers India Limited has partnered with the German firm DEEP.KBB GmbH.

Depleted Gas Reservoirs

Another potential option involves using depleted natural gas reservoirs for LPG storage.

Possible locations include:

• Krishna–Godavari Basin
• Cambay Basin
• Mumbai Offshore Basin

These reservoirs can store large volumes of gas once extraction activities end.

Significance

India’s growing LPG demand highlights the need for stronger energy infrastructure and supply resilience.

Developing large-scale underground storage facilities could:

• Reduce vulnerability to global supply disruptions
• Improve energy security
• Ensure stable fuel supply for millions of households

Given the country’s expanding LPG consumption, strengthening storage capacity will be essential for maintaining reliable and affordable energy access.