India Directs Refineries to Prioritize LPG Production, Restricts Petrochemical Use of C3/C4 Streams

The Government of India’s Ministry of Petroleum and Natural Gas has issued a revised order directing all domestic and SEZ oil refining companies, including petrochemical complexes, to maximize Liquefied Petroleum Gas (LPG) production by diverting C3 and C4 hydrocarbon streams exclusively for LPG supply.

The order, dated March 9, 2026, was issued under the Essential Commodities Act, 1955 and the Petroleum Products (Maintenance of Production, Storage and Supply) Order, 1999, aiming to ensure uninterrupted LPG availability for households across the country.

Under the directive, all C3 and C4 streams — including propane, butane, propylene, and butenes — produced, recovered, or fractionated in refineries and petrochemical complexes must be utilized solely for LPG production. These volumes must be supplied only to the three public sector Oil Marketing Companies (OMCs): Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL).

The government has also prohibited refineries and petrochemical complexes from diverting these streams for petrochemical manufacturing or downstream derivative production, effectively restricting their use in other petrochemical applications.

Authorities noted that LPG is a critical domestic cooking fuel in India, with more than 99% of domestic LPG consumption supplied by the three public sector OMCs. Ensuring adequate supply is therefore considered essential for maintaining public welfare and economic stability.

The ministry warned that any violation of the order will attract action under the Essential Commodities Act, 1955, and related petroleum supply regulations.

The revised directive supersedes the ministry’s earlier order dated March 5, 2026, and has come into immediate effect, remaining valid until further notice from the central government.

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