Indian Oil Corp finalizes LPG import deal with Algeria's Sonatrach for 2027

New Delhi: Indian Oil Corp, the country's top refiner, has finalised a deal with Algeria's Sonatrach to import liquefied petroleum gas (LPG) in 2027, three trade sources aware of the matter said.

India is diversifying its sources of LPG, mainly used as cooking gas, to cut its reliance on the Middle East after the recent blockade of the Strait of Hormuz affected energy flows, forcing the South Asian nation to ration LPG supplies.

Under the deal, IOC will be lifting one very large gas carrier containing 45,000 to 55,000 metric tons of LPG, a mix of propane and butane, every month.

IOC used to have a term deal with Sonatrach until a few years ago, but later the company switched to purchases from the Middle East, one of the sources said.

Algeria's LPG prices are lower than Saudi Aramco Contract Price, a second source said, adding IOC's deal with Sonatrach is for lifting the cargoes on a free-on-board basis.

IOC and Sonatrach did not respond to Reuters emails seeking comments.

India began importing LPG from Algeria in June, and is expected to receive about 110,000 tons of LPG in August, according to the preliminary LSEG trade flows.

India has increased its intake of U.S. LPG to offset the loss of Middle Eastern supplies, while pushing customers to shift to piped gas. India plans to buy up to a quarter of its LPG imports from the United States in 2027, sources said last month.

The three state retailers - Indian Oil Corp, Hindustan Petroleum Corp, and Bharat Petroleum Corp - are expected to float a joint tender to import LPG from the U.S., sources said.