India LPG demand continue to grow as the country expands household gas connections and boosts clean cooking fuel access. India LPG demand could also benefit from rising US LPG exports and evolving global trade routes, including a proposed pipeline project across Panama.
Shipping experts say the pipeline plan is unlikely to disrupt LPG shipping demand and could even increase voyage complexity for gas carriers.
Panama pipeline may reshape LPG shipping routes
A proposed 76-km pipeline across Panama aims to transport propane, butane and ethane between terminals on the Atlantic and Pacific coasts.
According to project tender documents:
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Capacity: 2 million barrels per day
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Products: Propane, butane, ethane
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Purpose: Bypass the Panama Canal
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Expected commissioning: After 2031
Peter Hadjipateras, Chief Information, Security and Sustainability Officer at Dorian LPG, said the pipeline could require massive marine terminals on both sides of Panama.
He noted that the planned capacity equals nearly the entire current LPG export capacity of the US Gulf Coast, which is equivalent to about four VLGC cargoes per day.
Limited threat to LPG shipping demand
Despite the scale of the project, industry experts believe the pipeline will not significantly reduce demand for LPG carriers.
Currently, nearly 30% of US LPG exports do not transit the Panama Canal and instead travel via trans-Atlantic routes.
If the pipeline becomes operational, it may add additional discharge and loading steps for shipments moving from Houston to Asia, increasing voyage time and operational delays.
This could actually increase ton-mile demand for VLGC vessels.
Economics will decide pipeline usage
The success of the pipeline will largely depend on its cost competitiveness.
Traders will compare:
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Panama Canal transit fees
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Pipeline transportation costs
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Terminal loading and unloading charges
If the pipeline costs are higher, shipping companies may continue to prefer traditional canal transit.
India remains a key LPG demand driver
India is one of the world’s largest LPG importers, purchasing around 20 million tonnes annually, mostly from the Middle East.
However, global LPG trade is evolving as the country explores additional suppliers, including the United States.
India recently issued a tender for up to 2 million tonnes of US LPG supply for 2026, although analysts believe this move is primarily strategic.
The Middle East still provides about 95% of India’s LPG imports.
LPG expansion supported by household connection growth
India’s LPG demand continues to grow due to government programs that promote clean cooking fuel.
Authorities plan to add 2.5 million new household LPG connections over the next two years.
Subsidized LPG programs have helped millions of households switch from biomass, coal and wood stoves to cleaner LPG fuel.
Meanwhile, infrastructure projects such as the Kandla–Gorakhpur LPG pipeline are expected to improve distribution efficiency across northern India.
