The Hormuz choke should push Indian kitchens to switch from LPG to electric cooking

Liquefied petroleum gas (LPG) is a fuel commonly used in Indian households and commercial establishments for cooking purposes. It is most often a combination of propane and butane. An almost-fully-burning clean fuel, it has replaced firewood and kerosene in most Indian kitchens.

LPG is produced as a byproduct of natural gas liquids (NGL) extraction or as a distillate product from the oil refinery process. The cost of extraction as a byproduct is much lower than as a distillate, which explains to some degree why India still relies on LPG imports rather than on domestic oil distillation for its full annual requirement.

The global demand for LPG is over 340 million tonnes annually. India’s consumption of LPG, almost entirely for cooking, is approximately one-tenth of the world’s consumption at around 31.3 million tonnes. The household sector, utilizing 14.2kg cylinders, accounts for the overwhelming bulk, approximately 87% of total consumption. The commercial sector (restaurants mainly) uses 19kg, 47.5kg or 425kg cylinders and accounts for 13% of total usage.

For nearly 40 years after the late 60s, India saw a gradual uptake of LPG as a kitchen fuel. Most households continued to use a mix of coal, firewood, kerosene and LPG during that time. The 2011 census showed that 29% of Indian households were using LPG; it was 62% in 2016 and has reached ‘near saturation’ levels today. India has a little over 300 million households and now has 330 million gas connections, which implies full penetration.

The government’s scheme to convert the population to clean burning fuel has been a success. If you add the fact that its LPG subsidy has been specifically aimed at poor households using an Aadhaar-based direct benefit transfer (DBT) mechanism, it can be deemed a spectacular success. The online process for ordering refills and a transparent scorecard for LPG distributors that uses a star rating system has resulted in much greater empowerment of LPG consumers.

This grand success has an Achilles heel. Nearly 60% of India’s LPG needs are imported and nearly 90% of that is sourced from the Gulf. Our biggest source countries are the UAE, Qatar, Saudi Arabia and Kuwait.

Bringing these imports using ships called VLGCs (Very Large Gas Carriers) requires transit through the Strait of Hormuz. Each VLGC carries about 50,000 tonnes of LPG. India needs about 400 such ships a year, a little more than one a day, to fulfill its import demand expected to reach 20 million tonnes.

The Strait of Hormuz, named for the Zoroastrian divinity Ahura Mazda, has become a major chokepoint in the ongoing war between the US and Iran.

The near-term strategy for Indian homes is to practise LPG conservation. Using pressure cookers and communal cooking can reduce cooking time substantially. Using electricity for peripheral cooking tasks like water boiling and making tea diversifies the use of energy. Cooking with induction stoves saves about 30% of the heat for the same cooking task. Only when direct heat is used for charring, like that used to make rotis, is gas a better alternative.

Beyond measures at the household level, India must continue its diplomacy with Iran to get more ships through Hormuz. Every three ships that pass through the strait gives India two days of LPG supply. India should also increase purchases from Saudi Arabia, Russia and the US. Saudi Arabian LPG could be contracted through its Red Sea ports.

Red Sea transit will require passage through the Bab el-Mandeb Strait. This strait is sandwiched between Yemen and Djibouti and could also be targeted if Houthis in Yemen join the fight, although Iran itself struck a Saudi hydrocarbon target on the Red Sea coast after its South Pars gas-field was hit.

Longer term, India must scale its domestic production and increase strategic storage of LPG. India’s storage capacity is placed at about 150,000 tonnes, or two days of demand, and it should expand to at least 30 days of demand. As India proceeds towards its net-zero emissions target set for 2070, it is important to promote electricity-based alternatives. This can and should be achieved concurrently with the grid being decarbonized.

I ran a scenario analysis through Claude with the following assumption: blended adoption between rural and urban households rises from 8% today to 25% in 2030 to 45% in 2035. The analysis projects LPG demand will drop to about 21 million tonnes by 2035, which can be met with increased domestic production and limited imports. The increase in power requirement due to this is about 100 terawatt hours per year or 4% extra, which is easily plannable.

In the same way that India switched from earlier cooking fuels to LPG, it must begin an aggressive transition to electricity-based cooking. Ahura Mazda, the ‘father of fire,’ would approve.

P.S: “If it weren’t for electricity, we would be watching television by candlelight,” said Comedian George Gobel.

The author is chairman, InKlude Labs. Read Narayan’s Mint columns at www.livemint.com/avisiblehand