India’s largest state-owned oil company, Indian Oil Corporation (IOC), has signed a deal with Algeria’s state energy company Sonatrach to import liquefied petroleum gas (LPG) from 2027 as India seeks to reduce its reliance on Middle Eastern suppliers.
Under the agreement, IOC will import between 45,000 and 55,000 tonnes of LPG per month, equivalent to up to 660,000 tonnes annually. The shipments will contain propane and butane, widely used as cooking fuel.
The deal follows disruptions around the Strait of Hormuz that exposed India’s dependence on Gulf suppliers and contributed to LPG supply pressures.
Algeria Offers Competitive Pricing
Algeria’s return as a major LPG supplier is being supported by competitive pricing. Sources said Sonatrach’s LPG prices are currently lower than Saudi Aramco’s contract prices, making Algerian supplies attractive to Indian refiners.
India began importing LPG from Algeria in June and is expected to receive around 110,000 tonnes in August, according to preliminary trade data.
The agreement also strengthens Algeria’s position as an energy supplier beyond its traditional European markets and highlights Africa’s growing role in India’s energy security strategy.
Africa Gains Importance in India’s Energy Supply
India is increasingly turning to African energy producers as it diversifies its supply chains.
Nigeria, Angola and Algeria are among India’s key African energy partners, with Indian refiners purchasing African crude because of the quality of several grades and their suitability for refining.
The latest LPG agreement adds another dimension to India’s growing energy relationship with Africa.
India has historically relied heavily on Middle Eastern suppliers, including the UAE, Qatar, Kuwait and Saudi Arabia. However, recent shipping disruptions have encouraged the country to seek alternative sources.
India is also increasing purchases from the United States and plans to source as much as a quarter of its LPG imports from the US by 2027.
For African energy producers, India’s diversification strategy could create new opportunities to expand exports and establish longer-term positions in one of the world’s largest energy markets.