India rushes for LPG to meet demand as Saudis delays flow

Fuel retailers in India are making hurry for liquefied petroleum gas ahead of the nation’s most celebrated festival, as demand looks set to climb just as drone attacks on Saudi Arabian facilities hurt exports.

Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. are clearing the market for producing LPG supplies for delivery before Diwali in late October, after Aramco deferred some shipments, said an official from Indian Oil, the nation’s biggest fuel retailer.

“We are expecting higher demand for LPG next month and Saudis have also indicated rescheduling of the first couple of shipments for October,” said Sanjiv Singh, chairman of Indian Oil in a interview. “We are pursuing very hard for some extra LPG. Everyone is trying, because October-November are tricky months.”

India, the world’s second-largest LPG importer, gets about half of its requirements from foreign suppliers, mostly from Middle Eastern producers in Saudi Arabia, Qatar, Oman and Kuwait.

Demand for the fuel typically climbs after the monsoon season ends in around September, and festive season begins in the fourth quarter.

Seasonality aside, the nation’s demand has also received a boost from Prime Minister Narendra Modi’s plans to link poorer communities to LPG supply networks in efforts to reduce the use of pollution causing fuels such as wood and cow dung.

Indian Oil’s Singh expects supplies from Abu Dhabi to be shared among state fuel retailers, which typically source cargoes collectively.

“We are not seeing any crisis, but just taking extra precaution for festivals,” Singh said.

Saudi Arabia’s exports may be cut by about 600,000 tons during the outage that’s expected to last about three weeks, said Thomas Olney, global head of natural gas liquids at industry consultant FGE. That’s a significant volume when compared to the kingdom’s monthly sales, which he estimates at about 708,000 tons.

“We have no other choice but to keep importing LPG continuously,” BPCL refineries director R. Ramachandran said. “We need the ships to keep coming, all the time.”