Algeria: Sonatrach Positions for Expanded LPG Supply in 2027

Algeria’s state energy company, Sonatrach, is poised to resume regular liquefied petroleum gas supplies to Indian Oil Corp in 2027 under a monthly cargo arrangement that could restore a commercial relationship between the two companies after several years.

Three trade sources familiar with the transaction said Indian Oil had finalised the deal with Sonatrach for the supply of one very large gas carrier every month next year.

Each shipment is expected to contain between 45,000 and 55,000 metric tonnes of LPG, comprising propane and butane.

The arrangement would give Sonatrach a regular outlet for LPG cargoes in one of the world’s major importing markets and return the Algerian company to a term supply relationship it previously held with Indian Oil.

The two companies had maintained a term contract until a few years ago, when Indian Oil later turned to Middle Eastern purchases, one of the sources said.

Monthly cargo programme

The planned 2027 supplies are to be lifted on a free-on-board basis, meaning the buyer will take delivery of the cargo at the point of shipment.

Sonatrach’s LPG is also understood to have a pricing advantage over Saudi Aramco Contract Price, one source said, a factor that may have supported the return to regular Algerian supplies.

Neither Sonatrach nor Indian Oil responded to emails requesting comment on the reported agreement.

The proposed monthly schedule points to a sustained supply programme rather than isolated spot transactions. At the lower end of the reported cargo range, the arrangement could involve 45,000 tonnes each month; at the upper end, monthly volumes could reach 55,000 tonnes.

That would place annual supplies under the programme at between 540,000 and 660,000 metric tonnes if all 12 scheduled cargoes are lifted.

The reported deal also builds on Algeria’s return as an LPG supplier to Indian Oil this year. India began receiving LPG from Algeria in June, and preliminary LSEG trade flow data showed that about 110,000 tonnes were expected in August.

Return to a former buyer

The 2027 arrangement comes after disruptions to energy flows through the Strait of Hormuz forced India to ration LPG supplies and look outside its traditional Middle Eastern sources.

The development, for Sonatrach, restores access to a buyer it had supplied under a term agreement in the past.

Indian Oil’s planned purchases from Algeria come as the Indian market turns to alternative supply sources. The country has also increased LPG intake from the United States and encouraged customers to use piped gas.

Sources said India plans to obtain up to one-quarter of its LPG imports from the United States in 2027.

Indian Oil, Hindustan Petroleum Corp and Bharat Petroleum Corp are also expected to issue a joint tender for LPG imports from the United States.

Against that backdrop, Sonatrach’s prospective 2027 programme gives Algeria a defined place in the supply arrangements being assembled for next year.

The monthly cargo deal would also build on the Algerian volumes already entering India in 2026, beginning with June imports and the expected August deliveries.

The commercial significance lies in the return of a former term customer and the prospect of supplying regular LPG cargoes throughout 2027.