Domestic LPG Supply in Disarray

Due to the recent attacks in Iran, Qatar has halted its LNG exports, causing a complete suspension of LNG supplies from Qatar to India. Approximately 40% of India’s LNG requirements are typically met through imports from Qatar. In light of this situation, PetroNet LNG has announced that city gas distribution companies, fertilizer units and gas-based power projects will face a 40% cut in LNG supplies. As a result, LNG prices in the spot market have surged. Additionally, the closure of the Hormuz Strait has severely limited the chances of LNG reaching Indian shores. Even if the blockade is overcome and LNG is imported, CGDs and industrial units are hesitant to procure it.

The country is also facing an imminent domestic cooking gas shortage. Around 90% of the cooking gas consumed in India comes through imports, primarily from Saudi Arabia, Kuwait and the UAE. Due to the Iran attacks, LNG imports from these nations have stalled. Current domestic reserves are estimated to last only for a month. Government and regulatory authorities are actively deliberating on ways to address this emerging crisis.

Internationally, LNG prices have escalated sharply. Moreover, LNG shipments from Gulf countries, which typically take five days to arrive, may take up to a month or more to reach India. The government is exploring alternative sources, including imports from countries like the U.S. and Russia, while assessing viable strategies to mitigate the supply disruption.