Indian Oil ramps up LPG output 30% as Hormuz disruption tests India’s energy security

State-owned Indian Oil Corporation (IOC) increased liquefied petroleum gas (LPG) production by nearly 30% and kept its refineries running above full capacity as disruptions to maritime trade through the Strait of Hormuz put India's energy supplies under pressure, chairman Arvinder Singh Sahney said on Monday.

Addressing IOC's 67th annual general meeting, Sahney said the escalation of the West Asia conflict had disrupted global energy markets and forced the company to diversify crude sourcing, rework refinery operations and secure supplies from alternative geographies.

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"For IndianOil, the priority during this unprecedented crisis has remained crystal clear - to maintain continuity of energy supplies despite constrained sourcing options and volatile international markets," he said.

India imports more than 88% of its crude oil requirement, with around 45% of crude imports and nearly 90% of LPG imports linked to the Strait of Hormuz. Any prolonged disruption to the strategic waterway therefore poses a significant risk to the world's third-largest oil consumer.

Sahney said IOC responded by diversifying crude purchases, adjusting refinery operations and strengthening supply-chain coordination, while working closely with the Ministry of Petroleum and Natural Gas.

"With close monitoring and guidance from the Ministry of Petroleum and Natural Gas, our teams have responded with agility - diversifying crude sourcing, realigning refinery operations and strengthening supply-chain coordination to secure alternate supplies, optimise cargo movements and rebalance products across regions," he said.

The company deployed 24-hour control rooms, daily reviews and real-time market monitoring to identify and address supply gaps. Despite having to move significantly away from Middle Eastern crude grades, IOC said it maintained product availability across the country.

"Despite a significant shift away from Middle Eastern crude grades, our refineries operated above 100 per cent utilisation, LPG production was ramped up by nearly 30 per cent within a short period, and our gas business maintained supplies to priority sectors while securing additional LNG from diversified geographies," Sahney said.

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Record operations despite West Asia shock

The supply disruption came as IOC posted a record operating performance for the year ended March 2026.

The company reported a standalone net profit of Rs 36,802 crore on turnover of about Rs 8.86 lakh crore. Aggregate sales across petroleum products, natural gas and petrochemicals exceeded 105 million tonnes.

IOC's refineries processed a record 75.45 million tonnes of crude during the year, while liquid pipeline throughput reached an all-time high of 102.52 million tonnes. Domestic petroleum-product sales also hit a record 88.97 million tonnes.

The strong operating performance extended into the first quarter of the current financial year. IOC processed a record 19.17 million tonnes of crude, equivalent to 109.4% capacity utilisation, while pipeline throughput rose to a quarterly record of 28.55 million tonnes.

Its share of the domestic petroleum-products market increased to 43.1%, Sahney said.

"While profitability during the quarter remained under pressure from higher crude costs arising from the West Asia conflict, the strength of our operating performance gives us confidence in the underlying resilience of your company," he said.

Refining capacity to cross 98 million tonnes

IOC is also stepping up investments to expand its refining footprint.

Expansion projects at its Panipat, Gujarat and Barauni refineries are expected to lift the company's group refining capacity from 80.75 million tonnes a year to around 98 million tonnes.

As India works towards expanding its overall refining capacity to 300 million tonnes a year, IOC expects to account for more than 40% of the additional capacity, Sahney said.

At the same time, the company is seeking to reduce its reliance on traditional refining by expanding into higher-growth businesses such as petrochemicals, natural gas, renewables, biofuels, green hydrogen and sustainable aviation fuel.

IOC aims to increase its petrochemical intensity to around 15% by 2030 and raise natural-gas sales 1.5 times by the same year. It also plans to increase upstream integration to more than 10% by 2031.

On energy transition, construction has begun on a large-scale green hydrogen plant at Panipat. IOC has also received ISCC CORSIA certification for sustainable aviation fuel production through co-processing at its refinery.

Its renewable-energy arm Terra Clean is developing 1 GW of capacity, with another 4.3 GW under preparation.

For Sahney, the disruption caused by the West Asia conflict has reinforced the importance of preparing for supply shocks before they occur.

"Resilience has to be built before it is tested," he said. "In an uncertain world, energy security depends not only on scale, but equally on agility, diversification and preparedness."

Sahney said IOC's strategy would be to evolve into a more diversified and integrated energy company while keeping India's energy security at the centre of its operations.

"In moments of national need, the country's energy security comes first," he said.