Abu Dhabi National Oil Company (ADNOC) has reportedly announced plans to begin supplying liquefied petroleum gas (LPG) from the US to India starting this June as part of a strategic shift in response to the ongoing US-China trade tensions.
The decision by ADNOC will allow the company to redirect more of its own LPG to China, where demand has surged following the imposition of steep tariffs by the country on US goods, reported Reuters, citing sources.
Consequently, India, the world’s second-largest LPG importer, will see a reduction in its import costs.
India, which traditionally sources more than 80% of its LPG imports from Middle Eastern countries such as Saudi Arabia, the United Arab Emirates, Qatar, and Kuwait, had approached suppliers earlier this month to consider swapping some of their term supply with cheaper US LPG.
The request was for US cargoes to be delivered at discounts to the Saudi Contract Price.
In line with these discussions, ADNOC’s trading units have agreed to supply US LPG cargoes to Indian refiners under the annual contracts from June to July.
The widening price gap between Middle Eastern and US LPG has been caused by the US-China trade war, the report said.
However, the transition to US LPG will seemingly not be possible in its entirety. “It is difficult to replace the entire volumes with US LPG,” one source commented.
Major Indian refiners such as Indian Oil, Bharat Petroleum, and Hindustan Petroleum have not yet responded to requests for comment.
In fiscal year 2023-24, India imported approximately 60% of its overall LPG consumption, amounting to 29.66 million tonnes, as per government data.
Meanwhile, China’s National Offshore Oil Corporation has finalised a term agreement to purchase LPG from ADNOC.
