Prioritising Natural Gas Supplies Amid West Asia Crisis

March 11, 2026

Why in News?

The ongoing conflict in West Asia and the disruption of maritime traffic through the Strait of Hormuz have significantly affected Liquefied Natural Gas (LNG) supplies to India.
To manage the supply shock and protect essential consumer sectors, the Government of India has invoked emergency powers under the Essential Commodities Act, 1955 to regulate and prioritise the allocation of natural gas.
The Ministry of Petroleum and Natural Gas (MoPNG) has issued an order diverting gas supplies to “priority sectors” such as households and transportation while curtailing supplies to certain industrial sectors.

What’s in Today’s Article?

Strait of Hormuz Disruption:

The Strait of Hormuz, a narrow waterway between Iran and Oman, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
It is one of the most critical energy chokepoints in the world, as it handles about one-fifth of global liquid petroleum consumption and LNG trade.
Over 50% of India’s LNG imports from countries such as Qatar and the UAE transit through this route. Cargoes moving through the Strait account for about 30% of India’s total gas consumption.
With Iran warning ships against transit and attacks reported on vessels, maritime movement has nearly halted, disrupting LNG shipments to India.

India’s Dependence on Imported Gas:

India’s energy system is significantly dependent on imported natural gas.
Out of the total gas demand of about 190 million standard cubic metres per day (mscmd), around 50% of this demand is met through LNG
LPG imports meet nearly 60% of India’s requirement. Over 80% of LPG imports also pass through the Strait of Hormuz.
Thus, geopolitical disruptions in West Asia have direct implications for India’s energy security.

Government Measures to Manage the Gas Shortage:

Invocation of the Essential Commodities Act: The government used emergency powers to regulate gas distribution, ensuring essential sectors receive adequate supplies while shifting the shortage burden to non-priority sectors.
Four-tier priority allocation system: The MoPNG created a four-category priority system based on average gas consumption over the past six months.
- Priority Category I – 100% supply, due to their direct impact on citizens - PNG (Piped Natural Gas) for households, CNG for the transport sector, gas used for LPG production, gas required for essential pipeline operations.
- Priority Category II – 70% supply. Fertiliser plants - Gas allocation is strictly restricted for fertiliser production only, and units must certify compliance through the Petroleum Planning and Analysis Cell (PPAC).
- Priority Category III – 80% supply. Tea industries, manufacturing and other industrial consumers connected to the national gas grid.
- Priority Category IV – 80% supply. Commercial and industrial consumers supplied through City Gas Distribution (CGD) networks.

Curtailment of Gas to Non-Priority Sectors:

To divert gas to essential sectors, supply to following industrial users has been reduced -
- Petrochemical units
- Gas-based power plants
- Domestic gas consumers from difficult blocks
- Refineries, whose gas supply has been reduced to 65% of their recent average consumption
The public sector company GAIL has been tasked with managing these allocations.

Measures to Secure Supply:

Increase in domestic LPG production:
- The government directed refiners to maximise LPG output by using propane and butane streams. This has led to a 10% rise in LPG production.
- Private companies such as Reliance Industries Limited (RIL) have also pledged to increase LPG output from the Jamnagar refining complex.
Prioritisation of domestic consumers:
- India has over 33 crore domestic LPG consumers, making uninterrupted household supply a top priority.
- Measures include:
  - Prioritising domestic LPG over commercial LPG users (e.g., hotels and restaurants).
  - Increasing the minimum refill booking gap from 21 days to 25 days to prevent hoarding.
  - Ensuring daily distribution of about 60 lakh LPG cylinders, unchanged from pre-crisis levels.
- A three-member committee of oil marketing company executives has been formed to review requests from commercial LPG consumers and allocate supplies where feasible.
Diversifying LNG imports:
- India is attempting to source LNG from alternative suppliers such as Norway and the United States.
- However, diversification faces logistical constraints like shipping time from these countries is around two months, and LNG prices have surged from $6–8 per MMBtu to about $15 per MMBtu.
- Despite higher costs, imports from distant markets become economically viable once prices exceed $10 per MMBtu.

Challenges and Way Ahead:

Geopolitical vulnerability: Heavy dependence on West Asian energy supplies exposes India to disruptions during regional conflicts.
- Diversification: India should expand LNG supply agreements with countries such as Australia, the U.S., and African producers to reduce reliance on West Asia.
Chokepoint risk: Reliance on the Strait of Hormuz makes India vulnerable to maritime security disruptions.
- Creation of strategic gas reserves similar to petroleum reserves could cushion temporary disruptions.
Limited domestic gas production: Domestic gas output is insufficient to meet rising demand.
- Encouraging exploration in deepwater, ultra-deepwater, and difficult basins can increase indigenous gas output.
Time lag in diversification: Alternative LNG imports from distant countries involve long shipping lead times.
- India must strengthen partnerships through long-term contracts and multilateral energy cooperation.
Industrial disruption: Curtailing supplies to industries like petrochemicals and power plants may affect production and economic activity.
- Accelerating solar, wind, and green hydrogen initiatives can reduce dependence on fossil fuels.

Conclusion:

The disruption of LNG supplies due to the West Asia conflict highlights the fragility of global energy supply chains and India’s vulnerability to geopolitical shocks.
The crisis underscores the urgent need for energy diversification, domestic production enhancement, and resilient supply chains to ensure long-term energy security for India.