Government Directs Refineries to Prioritize LPG Production, Restricts Use of Propane and Butane for Petrochemicals

The Government of India has issued a new directive requiring all oil refining companies in the country to prioritize the production of Liquefied Petroleum Gas (LPG) in order to ensure adequate domestic supply. The order has been issued under the powers granted by the Essential Commodities Act, 1955 and the Petroleum Products (Maintenance of Production, Storage and Supply)

According to the directive, all oil refining companies operating in India must maximize the use of Propane and Butane streams available with them for the production of LPG. These streams must be supplied only to the three public sector Oil Marketing Companies (OMCs) — Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) — to support the domestic LPG distribution system.

The government has also instructed that oil refiners must not divert or use Propane or Butane streams for the manufacture of petrochemical products or any other downstream derivatives. This measure has been taken to ensure that adequate feedstock is directed toward LPG production in the interest of maintaining uninterrupted supply to households across the country.

In addition, the public sector OMCs have been directed to ensure that the LPG procured under this arrangement is supplied exclusively to domestic LPG consumers.

Authorities stated that any violation of the order will attract action under the Essential Commodities Act, 1955 and the Petroleum Products (Maintenance of Production, Storage and Supply) Order, 1999, along with other applicable laws.

The order has come into effect immediately and will remain in force until further instructions from the Central Government.

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