Indian Oil Corporation (IOC), India's largest refiner, is planning to acquire a 50% stake in very large gas carriers (VLGCs) to support increased US LPG imports. According to a tender document reported by Reuters, this move would make IOC the first Indian refiner to own VLGCs, marking a significant shift from its current reliance on time-chartered vessels for both LPG and crude oil transportation. The company currently relies mainly on time-chartered LPG and crude tankers, with IOC not immediately responding to requests for comment regarding the acquisition strategy.
As reported by Reuters, IOC is seeking VLGCs with cargo capacity ranging from 80,000 to 93,500 cubic metres and an age of no more than 12 years. The tender has been issued to a select group of companies, with interested bidders able to offer up to two VLGCs though IOC has not disclosed the exact number of vessels it intends to purchase. The company has scheduled a pre-bid meeting for August 5 and commercial and technical bids must be submitted by September 7. Notably, IndianOil LNG, an IOC joint venture, reserves the right to acquire one or more vessels under the tender, indicating potential for additional fleet expansion.
State-run oil marketing companies are planning to raise LPG imports from the US beyond the current annual volume of about 2.0 million tonnes as part of broader diversification efforts. According to Reuters, Indian state fuel retailers are set to increase purchases of U.S. LPG from 2027, with the vessels to be reflagged to India after the acquisition. The acquisition will enable IOC to reflag the vessels under the Indian flag following completion of the deal, as reported in the tender document.
As reported by Reuters, India's LPG imports from the US have risen sharply since the US-Iran war began, with June volumes almost 145% higher than February levels. However, U.S. LPG is typically more expensive for Indian buyers because of the longer voyage and higher freight costs, with an Asian LPG trader noting that "the biggest challenge in buying U.S. LPG is not availability but freight rates." The trader emphasized that cost-effectiveness remains a key consideration for the acquisition strategy, as the longer shipping routes significantly impact overall import costs despite adequate supply availability.
