Indian Oil Corporation (IOC), India’s largest state-owned commercial enterprise and oil refiner, has finalised a deal with Algeria’s state energy company Sonatrach to import liquefied petroleum gas (LPG) from 2027 as the South Asian country moves to reduce its dependence on Middle Eastern suppliers.
- Indian Oil Corporation (IOC) has signed a deal with Algeria’s Sonatrach to import LPG starting in 2027, aiming to diversify away from Middle Eastern suppliers.
- The agreement comes after disruptions near the Strait of Hormuz exposed India’s vulnerability and caused rationing of LPG deliveries.
- IOC will import 45,000 to 55,000 metric tonnes of LPG monthly from Algeria, marking Algeria’s return as a major supplier due to its competitive pricing.
- Recent supply risks from the Middle East have led India to increase imports from the US and Africa, with plans to source up to a quarter of LPG from the US by 2027.
The agreement comes after Strait of Hormuz disruptions exposed India’s reliance on Middle Eastern suppliers, causing LPG shortages and pushing the country to seek cheaper alternatives, sources told Reuters.
Under the deal, IOC will import between 45,000 and 55,000 metric tonnes of LPG each month through very large gas carriers, equivalent to about 540,000 to 660,000 tonnes annually.
The shipments will contain a mix of propane and butane, which are widely used as cooking fuel in Indian households.
Algeria strengthens role in India’s energy supply chain
The agreement marks a return of Algeria as a major LPG supplier to India after IOC previously had a term deal with Sonatrach before shifting purchases towards Middle Eastern producers.
Algeria’s competitive pricing also helped revive the partnership, with sources saying Sonatrach’s LPG prices are lower than Saudi Aramco’s Contract Price.
The deal strengthens Algeria’s position as a growing energy supplier beyond its traditional European markets, while expanding Africa’s role in India’s energy security strategy.
India began importing LPG from Algeria in June and is expected to receive about 110,000 tonnes of LPG in August, according to preliminary trade flow data.
Africa emerges as alternative energy partner
Beyond Algeria, India has expanded energy ties with African producers as it seeks to diversify supplies and reduce exposure to Middle Eastern disruptions.
Nigeria, Angola and Algeria remain among Africa’s key energy partners for India, with Indian refiners sourcing crude oil from the continent because of the quality of their grades and their suitability for processing.
In 2026, Indian state refiners increased purchases of African crude, including Angola’s Kissanje, Nemba and Dalia grades and Nigeria’s Agbami and Usan crude, highlighting Africa’s role in India’s energy supply chain.
Middle East dependence exposes supply risks
Meanwhile, the Strait of Hormuz disruptions have accelerated India’s efforts to diversify its LPG supply chain after years of relying heavily on Middle Eastern producers.
In 2024, India imported large volumes of LPG from Gulf suppliers, including about 8.1 million tonnes from the UAE, 5 million tonnes from Qatar, 3.4 million tonnes from Kuwait and 3.3 million tonnes from Saudi Arabia, according to Reuters-cited trade sources.
However, recent disruptions around the Strait of Hormuz, a key energy route between Iran and Oman that carries a significant share of global oil and gas shipments, exposed the risks of India’s dependence on Middle Eastern supplies.
To reduce these risks, India has increased LPG imports from the United States while encouraging consumers to shift towards piped natural gas to reduce reliance on imported cooking fuel.
Sources said India plans to source up to a quarter of its LPG imports from the US in 2027 as part of broader efforts to diversify supplies and deepen energy ties with Washington.
The shift creates new opportunities for suppliers in Africa and the wider Americas, including energy producers seeking to expand their role in global markets.
