An Indian consortium of state-run oil marketing companies is in talks with Norway’s Equinor for long-term liquefied petroleum gas (LPG) contracts.

This move is seen as an attempt to diversify sourcing away from traditional Middle Eastern suppliers amid escalating regional tensions.

What Happened: The consortium includes Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Ltd (HPCL), and Bharat Petroleum Corporation Ltd (BPCL), Mint reported. This strategic move is in response to the escalating tensions in West Asia, which could potentially disrupt energy prices and supplies. 

The NSE has sought clarification on the report from BPCL and HPCL.

Currently, the United Arab Emirates, Qatar, Saudi Arabia and Kuwait are the top LPG suppliers to India.

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The talks with Equinor are crucial as LPG makes up about 62% of all cooking fuels used in Indian households, with over 60% of LPG being imported. 

Equinor’s potential entry into India’s LPG market follows previous discussions on topics such as Equinor’s participation in India’s strategic petroleum reserves (SPR) and long-term deals for the supply of liquified natural gas (LNG) from Equinor's extensive portfolio in the US and Qatar.

The Indian LPG market has witnessed significant growth in recent years, with consumption in FY24 increasing 3.7% year-on-year to 29.6 million tonnes. To cater to this growing demand, India imported 4.5 million tonnes of LPG in the first quarter of FY25, a 17.7% increase from the same period last fiscal. 

Price Action: Shares of all three companies were soaring on Tuesday.

IOCL was up 1.18% at ₹172.09, HPCL gained 2.26% to reach ₹396.10 and BPCL soared 1.95% to trade at ₹350.50.

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