India Refiner Tries Again to Cut Dependence on Middle East LPG

By Bloomberg

An Indian buyer of liquefied petroleum gas is once again attempting to ease its dependence on Middle East shipments after some supply shocks last year stemming from drone attacks and even a trade war.

Bharat Petroleum Corp. is seeking bids from global suppliers for a fifth of its typical LPG needs in 2021, according to a tender seen by Bloomberg. Bidding is still open to Middle East producers, which already provide BPCL with the majority of its contracted needs. India’s second-biggest fuel retailer made an attempt to broaden its sources of supply earlier this year but the tender wasn’t awarded due to a lack of attractive offers, said traders.

The latest tender is aimed at getting better prices for supplies compared with those from the Middle East and to diversify sources of LPG, according to the objectives listed in the document. India’s fuel retailers get most of their LPG — typically used for cooking — from Saudi Arabia, Qatar, the U.A.E. and Kuwait, leaving them exposed to price fluctuations and supply shocks.

This was highlighted by drone attacks on Saudi Arabian processing facilities and fields, which happened just before India’s festival season, followed by curbed output from the Middle East as OPEC tried to manage the virus-driven oil supply glut.

India also faced more competition for Persian Gulf LPG amid the trade war between Washington and Beijing as China stopped importing from the U.S., its main supplier.

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