Everyone's Talking About LPG Shortages, But Do You Know How The Fuel Is Made? Explained

Last Updated:March 11, 2026, 12:33 IST

With energy supplies under pressure due to geopolitical tensions, LPG, a key fuel used by millions of households and businesses, is dominating headlines

The West Asia war and disruptions around the Strait of Hormuz—a crucial global energy chokepoint—have brought the spotlight on energy supplies worldwide. India, which imports around 60 per cent of its LPG (liquefied petroleum gas) mainly from the Middle East, is particularly sensitive to these developments as fluctuations in crude oil and gas markets ultimately affect domestic LPG prices and availability for cooking fuel and industry.

With energy supplies under pressure due to geopolitical tensions, LPG, a key fuel used by millions of households and businesses, is dominating headlines, raising questions about where it comes from, how it is produced, and why disruptions in crude oil and gas flows matter.

What Is LPG?

LPG stands for liquefied petroleum gas, a fuel made up mostly of propane (C₃H₈) and butane (C₄H₁₀)—hydrocarbons that are gases at normal temperature and pressure but can be turned into liquid under moderate pressure.

LPG doesn’t occur alone in nature; it exists mixed with other hydrocarbons in crude oil and natural gas and only becomes usable after processing.

Where Does LPG Come From?

There are two major sources of LPG—natural gas processing and crude oil refining.

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Natural Gas Processing: Natural gas from a well includes methane and heavier hydrocarbons such as propane and butane. In gas-processing plants, heavier gases are separated out from the methane. This mix of heavier gases forms LPG components which are then purified.

Crude Oil Refining: When crude oil is heated in a refinery, its components separate by boiling point (a process called fractional distillation). Propane and butane boil at relatively low temperatures and are collected as part of the petroleum mix that ultimately becomes LPG. Across global production, roughly 60 per cent of LPG comes from natural gas processing and 40 per cent from oil refining.

How Is LPG Produced Step-By-Step?

According to ELGAS, there are five steps in the production process:

Extraction and Initial Separation: To begin with, natural gas and crude oil are brought from wells to processing sites. Natural gas separators then remove methane (pipeline gas) and leave behind heavier hydrocarbon gases. In oil refineries, crude is heated, and different hydrocarbon fractions are separated.

Fractionation and Purification: The heavier hydrocarbon streams are further processed to isolate propane, butane, and isobutane from other gaseous components. Plants use refrigeration and other separation technologies to make sure impurities like water, hydrogen sulfide, and carbon dioxide are removed.

Liquefaction: LPG gases are compressed under moderate pressure (often around 8 bar) so that they become liquids. This liquid form makes LPG easier and safer to store and transport.

Storage and Bottling: The liquefied LPG is stored in large pressurised tanks at terminals. LPG is then transported to bottling plants, where it’s filled into the familiar cylinders used for household cooking and commercial purposes.

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Distribution: From bottling plants, LPG cylinders are transported by road, rail, tankers or pipelines to local distributors and delivery networks, reaching millions of consumers.

Why Is LPG So Important For India?

For many Indian households, LPG cylinders are the primary cooking fuel. According to Reuters, because LPG is derived from crude oil and natural gas, international price fluctuations and supply disruptions—such as those caused by geopolitical tensions—can influence LPG costs and supply chains in the country.

India’s policymakers and industry watchers thus pay close attention to global conflicts and energy flows, as they can ripple through to everyday energy costs and access for citizens.

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