LPG vs LNG Explained: Why West Asia Conflict Hit LPG Supply Harder in India

Why in News ?

Disruptions in shipping routes through the Strait of Hormuz due to the ongoing West Asia conflict have significantly impacted India’s energy supplies, with LPG being more severely affected than LNG.

Background and Context

India is highly dependent on energy imports, especially hydrocarbons from West Asia. A major share of these imports passes through the Strait of Hormuz, a critical global energy transit route.

Extent of Disruption

• India imports around 60% of its LPG needs
• Nearly 90% of LPG imports pass through the Strait → ~54% supply affected
• About 50% of natural gas is imported as LNG
• Around 55–60% LNG passes through the Strait → ~30% disruption

This has forced the government to prioritise domestic consumers and cut supplies to industrial and commercial users.

LPG vs LNG: Key Differences

1. Composition and Source

• LPG (Liquefied Petroleum Gas) : Mixture of propane and butane, derived from crude oil refining and gas processing
• LNG (Liquefied Natural Gas): Primarily methane, derived from natural gas

2. Liquefaction and Storage

• LPG liquefies under moderate pressure → easier storage
• LNG requires extreme cooling (-160°C) → complex cryogenic storage

3. Volume Reduction

• LPG reduces to 1/260th of its volume
• LNG reduces to 1/600th → more efficient for long-distance transport

4. Usage and Applications

• LPG: Cooking fuel, heating, small industries
• LNG: Converted to natural gas → used as PNG, CNG, and in power, fertiliser, and industry

5. Distribution Systems

• LPG : Cylinder-based delivery → suitable for rural areas
• LNG : Transported via ships → regasified → piped as PNG/CNG

6. Storage and Accessibility

• LPG : Easily stored in cylinders → high portability
• PNG (from LNG) : Requires pipeline infrastructure → limited reach

7. Safety

• LPG : Heavier than air → accumulates, higher risk
• Natural gas (LNG-derived) : Lighter than air → disperses quickly, safer

Why LPG Was Hit Harder

1. Higher Import Dependence via Strait

A larger share of LPG imports flows through the Strait of Hormuz compared to LNG, making it more vulnerable to disruptions.

2. Limited Alternatives

• LPG has fewer immediate substitutes
• PNG infrastructure is limited, especially in rural areas

3. Wider Consumer Base

• LPG serves 33+ crore households
• PNG reaches only ~1.5 crore users

This makes LPG supply disruption more socially sensitive.

4. Storage and Supply Chain Constraints

• LPG depends on regular cylinder refills
• Supply chain disruptions directly impact end users

Crisis Impact and Supply Prioritisation

• Household LPG supply has been protected
• Industrial and commercial supply reduced significantly
• PNG and CNG supply maintained at near 100% levels
• LPG disruption (~54%) is higher than LNG (~30%)

Government Response Measures

1. Promoting PNG Transition

• Incentives like free gas and waived connection charges
• Expansion of City Gas Distribution (CGD) networks

2. Boosting Domestic LPG Production

• Refiners directed to divert propane and butane
• Domestic output increased by ~40%
• Share in demand rose from 40% to ~55%

3. Demand Management

• Increased gap between cylinder bookings:
  • Urban: 25 days
  • Rural: 45 days
    • Encouraged use of alternative fuels for industries

4. Alternative Fuel Substitution

• Use of kerosene, biomass, coal, and fuel oil for industrial needs

Significance of the Issue

1. Energy Security Concerns

Highlights India’s vulnerability to geopolitical disruptions in critical chokepoints.

2. Importance of Diversification

Reinforces need to diversify import sources and routes.

3. Push for Clean Energy Transition

Encourages expansion of PNG, renewables, and domestic energy production.

4. Infrastructure Development

Accelerates investment in pipelines, storage, and gas distribution networks.

5. Policy Prioritisation

Demonstrates balancing act between household welfare and industrial demand.

Way Forward

1. Expanding Gas Infrastructure

Accelerate development of nationwide pipeline networks to increase PNG access and reduce LPG dependence.

2. Diversifying Import Routes

Explore alternative shipping routes and suppliers to reduce reliance on the Strait of Hormuz.

3. Strengthening Strategic Reserves

Build strategic reserves of LPG and natural gas to cushion supply shocks.

4. Promoting Renewable Alternatives

Encourage solar cooking, biogas, and electric cooking solutions in rural areas.

5. Enhancing Domestic Production

Invest in refining capacity and gas exploration to reduce import dependence.