Exploring the LPG Gas Supply Chain: From Production to Consumer

LPG is necessary in India as millions run their homes and households using Liquefied Petroleum Gas for cooking, heating, etc. But what does it entail to transport LPG gas from production to your doorstep? This blog post dissects each segment in the LPG supply chain and shows that this important fuel makes it to Indian households.

Why Is LPG Important?

LPG as an efficient and environmentally friendly fuel was first marketed in India in the 1950s when companies such as Burmah-Shell and Stanvac started production of LPG in refineries in Mumbai. As a domestic fuel, its consumption rose particularly after the mid-1970s with the nationalisation of foreign oil companies which formed big state organisations Bharat Petroleum, Hindustan Petroleum and Indian Oil Corporation (IOC). 

Under the Essential Commodities Act, LPG continues to be necessary for millions of Indian households and is further subsidised to remain so.

So, now let’s study the production process to supply chain methods of LPG in detail:

Step 1: Production – How LPG Is Made

It starts at oil refining companies and natural gas processing plants that produce LPG gas. It can be either a distillate of crude oil or from the natural gas production process. After nationalization in the 1970s, BPCL, HPCL and IOC are responsible for the production and distribution of LPG throughout the nation. 

Step 2: Storage and Transport – Liquefied Petroleum Gas Transport

After production, LPG is stored in big, high-pressure vessels to maintain its liquid state, a requirement for storage and transportation. Transportation of LPG is well controlled because it is a highly flammable product. In the process of distribution, LPG is taken in trucks, pipelines and ships to the bottling plants and storage spaces all around India. 

Step 3: Bottling Plants – Liquefied Petroleum Gas Before Delivery

LPG is transported to bottling plants where it is filled in the black cylinders familiar in most homes today. This bottling process needs adequate attention to ensure that it is safe and more importantly reliable. 

Step 4: Distribution Network – Reaching the LPG to the People

Bottled LPG cylinders are then distributed to distributors across the country’s regions. Before LPG was used in only 11.4% of rural households, state-led programmes such as the Pradhan Mantri Ujjwala Yojana (PMUY) have boosted LPG demand by releasing millions of connections to rural households since 2016.

Step 5: Delivery to Consumers – Right at Your Doorstep

Distributors handle the final leg of the journey: the distribution of LPG to the consumers’ doorstep. Due to the current distribution system, most urban clients can order cylinders by phone or on the web with delivery done within a few days. For rural households, PMUY and similar schemes have increased availability and ensured that LPG reaches even remote villages. 

Challenges of Supply Chain for LPG

While the LPG supply chain in India is well-structured, a few challenges remain:

• Subsidy Leakage and Commercial Diversion: LPG has for long been very subsidized in a bid to make it easily accessible to most households. However, they have been used in a way that allowed the diversion of the subsidised LPG to the commercial sectors.

• Urban-Rural Disparity: Although it is popular as an Urban fuel there is still low demand for LPG in the rural areas as compared to Urban areas. 

• Monopoly Structure and Lack of Competition: Most of the market is in the hands of state-owned enterprises, and this makes consumers have very little say on the prices or services to be offered.

Conclusion 

LPG supply chain has been put in place so it reaches the consumer safely. LPG's journey of production at refineries to distribution networks and reaching doorsteps depicts India’s sentiments towards providing energy to the masses. From the central parts of the world’s major cities to the outlying villages surrounded by agricultural fields, millions have embraced LPG gas as a main fuel, with the help of government programs as well as a well-developed network of supplies.