Indian Oil Corporation has bought LPG from Iran for the first time in nearly eight years, according to people familiar with the matter, as India struggles to deal with the LPG shortage caused by the Iran war.
The refiner will share shipments with its state-owned peers Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd, the people said, speaking on condition of anonymity due to trade sensitivity.
Indian Oil last bought LPG from Iran in June 2018, according to data intelligence firm Kpler, which said the current cargo is about 43,000 tonnes of butane and propane.
This amount would be enough to meet only half a day’s demand in India, where LPG is commonly used as a cooking fuel. The country imports about two-thirds of its supply, and 90% of it comes from West Asia, mainly through the Strait of Hormuz which has been effectively blocked since the beginning of the Iran war.
LPG shortage forced some Indians to cook with wood and fights broke out in lines to get LPG cylinders. New Delhi has reduced supplies to commercial users such as hotels and restaurants and imposed emergency measures to accelerate the development of natural gas pipelines.
This is the first Indian purchase of energy from Iran since the US earlier this month issued a temporary waiver allowing the country to buy crude oil or petroleum products from the Islamic republic. The market is keeping an eye on signs of potential buyers for Iranian cargoes that were long considered out of reach due to tough US sanctions.
People familiar did not provide any further information about the cargo or the ship carrying it. However, ship-tracking data from Kpler shows the LPG carrier Sea Bird is transporting Iranian LPG and indicates it will arrive at India’s Mangalore port on Thursday.
The ship had signaled its intention to sail to China while passing through the strait on 17 March before turning off its transponder signals. A few days later it reappeared in the Arabian Sea moving eastwards, even though its destination was Dubai in the opposite direction.
India is in the final stages of negotiations for the safe passage of two more LPG cargoes through Hormuz. Green Asha and Green Saanvi vessels are contracted by BPCL.
Indian Oil, BPCL and HPCL did not respond to emails seeking comment. Reuters earlier reported that India had bought its first LPG cargo from Iran in years.
