Why is India staring at LPG shortage?

With LPG shortage hitting day-to-day life in India, data suggest while the nation opted for a dramatic surge in LPG use, especially among poor households, driven by imports there was no plan to boost long-term, strategic LPG reserves in parallel.

With more than 85% of all of India’s imports having to cross Strait of Hormuz to reach the nation’s shores and limited back-up storage, the disruption has hit quickly unlike in the case of auto fuel where strategic reserves of crude oil and products are equal to two months of consumption.

The Indian LPG system is designed for operational flow, not stockpiling. And there are no concrete proposals currently to increase large underground storage either.

The International Energy Agency (IEA) has flagged the lack of such storage as an infrastructural weakness in India.

Surge in domestic gas

IEA figures show that India’s LPG imports increased threefold from 2011-12 to 2024-25 to some 20 million tonne. Imports constitute some 60% of India’s needs. India’s import dependency has increased from 47% in 2015 to the current levels.

This year, imports had crossed 18 million tonne in January. India’s total LPG consumption a month is some 3 million tonne making it the second-largest consumer of LPG in the world. But, the total storage capacity can feed less than half of that monthly requirement and almost all of it in tanks at import terminals such as Ennore.

In terms of long-term storage, India has two underground caverns for LPG – Mangaluru and Vishakapatnam with a total storage capacity of 1.4 lakh tonne. While Vishakapattinam storage was commissioned in 2007, only one has been commissioned since the ramping up of LPG consumption started – Mangaluru with 80,000 metric tonne, which is just a day’s consumption. The total underground storage amounts to 1.4 lakh tonne or equivalent to less than two days of consumption.

India’s daily LPG consumption stands at some 80,000 tonne now. More than 85% of it goes to households.

The country has 33 crore domestic LPG connections out of which some 10 crore were added since 2017 through the through Pradhan Mantri Ujjwala Yojana (PMUY). The PMUY scheme sought to offer clean cooking gas to poor people as well, freeing women from the drudgery of firewood-based chulhas, cow-dung and kerosene stoves. The scheme gave deposit-free LPG connections to adult women from poor households and subsidised the purchase as well. The surge in Indian LPG consumption as well as import dependency is attributed to this scheme.

The MoPNG, in its demand for grants in 2025 in Parliament, said there were no plans for constructing additional caverns, besides the two. The Mangaluru cavern became operational in 2025.

India signed an LPG import agreement with the U.S. in February for 2.2 million tonne per year but U.S. cargoes take some 45 days to reach India unlike the Persian Gulf cargoes.

Underground caverns an answer

Europe can store roughly 25% of total annual gas consumption.. European underground storage capacity equals to about 150% of annual LNG import volume, says Christoph Halser, Senior Analyst, Gas & LNG Research, Rystad Energy, an energy research and business intelligence firm based in Norway.

“Unlike for oil, where a mandate for 90 days emergency stock equivalent exists, European countries do not have a strategic government-controlled gas reserve and are not required to by the EU. The EU imposed storage filling targets for public storage facilities first in 2022, following the outbreak of war in Ukraine. These mandate member countries to reach 90% filling levels before the winter, with exceptions for market disruptions and technical constraints.” adds Mr. Halser.

India can be broadly divided into three geological zones relevant for such gas storage. The most proven is the Peninsular Shield—the Archean cratonic basement of granite, gneiss and charnockite underlying roughly 60% of peninsular India. Both operational LPG gas caverns sit on this rock.

At Visakhapatnam, the storage cavern lies 162 to 196 metre below ground level in Precambrian gneiss, using the hydraulic containment principle.

At Mangaluru, the host rock is granitic gneiss, with the floor at 141 metre below mean sea level. The engineering is proven. The rock is cooperative.

The second zone is the Deccan Traps—the vast basaltic plateau covering some 5,00,000 square kilometre of western and central India. For storage purposes, the traps present challenges. Engineers India Limited, designing a new LPG facility on the west coast, has encountered difficulties.

The third zone is the salt formations of Rajasthan’s Bikaner–Barmer belt. These halite deposits can be used as cavern storage. Salt caverns are cheaper and faster to construct, naturally impermeable, and capable of rapid injection and withdrawal. A refinery is under construction at Barmer and crude pipelines traverses the region. EIL has signed a partnership with Germany’s DEEP for salt cavern knowhow.

A fourth option—depleted gas reservoirs in the Krishna–Godavari, Cambay and Mumbai offshore basins—is under study.

Published – March 12, 2026 07:00 am IST