Indian Oil Secures 2027 LPG Deal with Algeria’s Sonatrach as India Diversifies Energy Supplies
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) in 2027, as India moves to diversify its energy supplies and reduce reliance on Middle Eastern sources.
Under the agreement, IOC will receive one very large gas carrier (VLGC) of LPG each month, carrying between 45,000 and 55,000 tonnes of propane and butane.
The cargoes will be supplied on a free-on-board (FOB) basis.
The deal comes after disruptions to energy flows through the Strait of Hormuz exposed India’s vulnerability to Middle Eastern LPG supplies and contributed to shortages that forced the country to ration LPG.
Algerian LPG has also become commercially attractive for IOC, with sources indicating that Sonatrach’s pricing is below Saudi Aramco’s contract price.
IOC previously had a term agreement with Sonatrach before shifting towards Middle Eastern suppliers.
India has already increased LPG purchases from other sources, including the United States, as part of its broader effort to strengthen supply security.
The country’s three state-run fuel retailers IOC, Hindustan Petroleum Corporation and Bharat Petroleum Corporation are also expected to jointly tender for US LPG imports, with India targeting up to 25% of its LPG imports from the US in 2027.
The Algerian agreement therefore marks a broader shift in India’s LPG procurement strategy, giving the country another major supply source while strengthening its resilience against disruptions in the global energy market.
