A New Direction in Energy Sourcing
India has signed its first structured agreement with the United States to import cooking gas (LPG). Union Minister for Petroleum and Natural Gas announced this on November 17, 2025, calling it a “historic first” for the country.
Under this one-year contract, India’s three main oil companies – Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), will import about 2.2 million tonnes of LPG from the US Gulf Coast in 2026. [1]
What the Numbers Mean
This deal covers nearly 10 percent of India’s annual LPG imports. Currently, India imports about 65 percent of its total LPG consumption, which is around 31 million tonnes each year. Until now, over 80 percent of these imports came from Gulf countries, mainly Qatar (27 percent), UAE (26 percent), and Saudi Arabia (19 percent). [2]
About 48 large gas carriers will bring LPG from the US to India during 2026. [3] The pricing will follow Mount Belvieu rates, which is a major pricing point for global LPG trade in Texas.
Why This Deal Matters
- Spreading Out Energy Sources
For years, India has depended heavily on West Asian countries for LPG. This put the country at risk from regional problems, supply cuts, and price swings. The new US deal helps India spread out its sources and reduce dependence on any single region.
The deal is part of India’s effort to provide secure and affordable LPG by buying from different countries. By adding the US to its supply chain, India gets more flexibility and better energy security.
- Improving Trade Relations
The timing of this deal is important. The US has raised concerns about India’s trade surplus and continued energy imports from Russia. This LPG agreement helps address both issues, it shows India is serious about buying more from America while also improving energy security.
India’s trade surplus with the US was about $42 billion last financial year. By buying more energy from America, India is working toward a more balanced trade relationship, which could ease tensions and help future negotiations.
- Protecting Consumers from Price Changes
The deal shows the government’s commitment to protecting consumers from global price jumps. Even when international LPG prices jumped by over 60 percent last year, the government kept prices at Rs. 500-550 per cylinder for Ujjwala scheme beneficiaries, while the actual cost was over Rs. 1,100. [4]
To keep these low prices, the government spent over Rs. 40,000 crore as subsidy last year. [5] The new deal aims to provide more stable pricing and reduce the subsidy burden over time.
How the Deal Came Together
The deal took months of negotiation. Senior officials from IOC, BPCL, and HPCL visited the US in July 2025 to meet with major American producers. These talks led to a contract with global energy companies including Chevron, Phillips 66, and TotalEnergies.
This is India’s first long-term contract with US suppliers. Earlier, India only made occasional spot purchases. This structured approach gives both sides more certainty and allows better planning.
Challenges Ahead
The deal has benefits but also brings some challenges. The main issue is that US LPG has more propane, while Indian cooking needs more butane, which usually comes from Middle Eastern suppliers.
Indian oil companies may need to blend the US LPG with butane or adjust their supply systems. Also, shipping from the US takes longer than from the Middle East, which increases costs. However, competitive pricing has made American LPG attractive despite these issues.
Effect on Middle Eastern Suppliers
Middle Eastern countries have noticed this development. Worried about losing market share to American suppliers, some Middle Eastern countries have already started lowering their prices. This competition could benefit India by creating better pricing from all suppliers.
What’s Next
This deal could be the start of a deeper energy partnership between India and the US. While the current contract is only for 2026, it creates a framework for longer-term arrangements.
India’s LPG market keeps growing, thanks to the Ujjwala Yojana, which has given subsidized LPG connections to millions of poor households. As more people start using LPG, especially in rural areas, India’s import needs will grow, creating more opportunities to work with different suppliers.
The deal fits into a bigger pattern of India-US energy cooperation. The US is already India’s fifth-largest crude oil supplier and second-largest LNG supplier. This LPG agreement strengthens the energy relationship between the two countries.
The Bigger Picture
Beyond business, this deal has symbolic importance. It shows India’s ability to balance relationships with old suppliers while creating new partnerships that serve its interests. The agreement shows how energy trade can support broader diplomatic goals.
For Indian households, the immediate impact may not be big, but the long-term benefits of having multiple suppliers and competitive pricing could mean more stable and affordable cooking gas. For millions of women who benefit from the Ujjwala scheme, this means continued access to LPG without sudden price jumps.
Conclusion
The India-US LPG deal is a milestone in both countries’ energy relationship and sets an example for future cooperation. By spreading out its LPG sources, India improves its energy security while also addressing US trade concerns. As the agreement plays out in 2026, it will show how similar contracts could work for other energy products, deepening the partnership between India and the US.
This “historic first,” shows a mature approach to energy diplomacy, one that balances domestic needs, business interests, and international relationships.
References
[1] Press Information Bureau, Government of India. (2025, November 17). India Concludes First-Ever Major LPG Import Deal with US.
[2] The Times of India. (2025, November 17). Oil PSUs ink deal to buy 2.2m tonnes, 10% of India’s LPG imports from US.
[3] The Telegraph India. (2025, November 17). India signs first structured US LPG import deal for 2026.
[4] Economic Times. (2025, November 18). India signs first long-term US LPG import deal to boost energy security.
[5] Business Standard. (2025, November 17). India’s oil PSUs ink landmark US LPG deal covering 10% of imports.
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