Gas crunch pushes govt to prioritize city supply, curb industry allocations

NEW DELHI: As natural gas supplies tighten amid the ongoing conflict in West Asia and the closure of the Strait of Hormuz, the Centre has directed gas producers and oil marketing companies to prioritize supplies to households and transport, curtailing allocations to sectors such as fertiliser, industry and power.

Under the Essential Commodities Act, the government on Tuesday ordered companies to ensure 100% assured supply of natural gas to domestic piped gas connections and compressed natural gas (CNG) for vehicles.

Other sectors will face restrictions. Industries and commercial consumers procuring gas through the national grid will receive 80% of their average supplies over the past six months, while fertilizer plants will be supplied 70% of their average allocation during the same period.

The notification also mandates a 35% cut in gas supplies to refineries and petrochemical companies.

Mint earlier reported that the government was working on a sector-wise prioritization framework for natural gas supplies.

Supply concerns intensified after deliveries from Qatar were disrupted following an attack on QatarEnergy’s Ras Laffan liquefaction complex on 2 March. Shipping through the Strait of Hormuz has also been suspended, further tightening energy supplies. The strait, which connects the Persian Gulf to the Arabian Sea, carries about a fifth of global oil, gas and fertilizer shipments.

The situation is significant for India, which imports about 55% of its natural gas requirements. Of the $14.9 billion worth of gas imports in FY25, roughly half came from Qatar, according to data from the Petroleum Planning and Analysis Cell (PPAC).

Global liquefied natural gas (LNG) prices have surged amid the West Asia conflict, roiling energy markets. European gas prices jumped as much as 30% on Monday—tracking a spike in crude oil—before settling about 6% higher. Asian LNG prices have more than doubled since the war broke out on 28 February, with traders expecting prices to remain elevated for the duration of the conflict, according to a Bloomberg report.

Separately, the government on Monday tightened access to domestic cooking gas as the escalating West Asia conflict threatens fuel supplies and injects volatility into global energy markets.

The Centre has prioritized household LPG consumption and introduced a 25-day lock-in period between cylinder bookings.

The move could create supply constraints for industrial users such as ceramic manufacturers, as well as commercial consumers including hotels and restaurants.

Late Monday, the petroleum ministry said it has constituted a three-member committee of executive directors from oil marketing companies to assess LPG requirements from restaurants, automobile users and other sectors and explore ways to allocate limited volumes.