Key facts
- Indian Oil Corp. is seeking 50% ownership stakes in very large gas carriers.
- The company aims to increase U.S. liquefied petroleum gas imports to 25% by 2027.
- Freight costs are identified as the primary obstacle to expanding U.S. LPG purchases.
- Indian Oil has set bid deadlines for ship acquisitions.
- Vessels acquired will be registered under the Indian flag.
Indian Oil Corp. is pursuing a strategic move to acquire 50% ownership stakes in very large gas carriers (VLGCs), a first for an Indian refiner. This initiative is part of India's broader plan to increase its liquefied petroleum gas (LPG) imports from the United States to up to one-quarter by 2027, aiming to reduce reliance on the volatile charter market for freight rates.
The company is currently accepting bids for ships with a carrying capacity between 80,000 and 93,500 cubic meters, with a requirement that eligible vessels be no more than 12 years old. IndianOil LNG may acquire one or more vessels through the tender process, which includes a pre-bid meeting scheduled for August 5 and a commercial and technical bid deadline of September 7. Vessels acquired will be registered under the Indian flag.
The primary challenge in expanding U.S. LPG purchases has been freight costs. Cargoes from the U.S. Gulf Coast involve significantly longer voyages compared to supplies from the Middle East, increasing delivered costs even when U.S. propane and butane prices are competitive. In 2025, India sourced approximately 90% of its 21.85 million metric tons of LPG imports from the Middle East. These imports met 66% of domestic consumption, leaving household cooking gas availability vulnerable to disruptions, such as those experienced earlier this year due to tensions in the Strait of Hormuz.
Indian Oil, alongside Bharat Petroleum and Hindustan Petroleum, is preparing tenders for U.S. supplies starting in 2027. India anticipates its LPG imports to reach around 20 million metric tons next year, with national consumption projected to rise to approximately 31 million tons. This strategic shift in energy procurement also aligns with India's commitment to boost bilateral trade with the U.S. by $10 billion and increase total bilateral trade to $500 billion by 2030. By partially owning vessels, Indian Oil aims to gain direct control over a portion of the associated freight expenses.