Petronet LNG, India’s largest importer of liquefied natural gas, has invoked a force majeure notice to its buyers following a supply disruption in West Asia, exposing India’s vulnerability that may particularly hit city gas distribution in Delhi and Mumbai.
India depends heavily on West Asia for LNG, a source of clean energy used by public transport systems as compressed natural gas (CNG), fertiliser and industrial units, and households via piped natural gas (PNG).
In a notice to the stock exchange, the company said it expressed its inability to send ships to Ras Laffan, the loading port in Qatar, to bring LNG due to disruption in the Strait of Hormuz. Simultaneously, the supplier QatarEnergy declared force majeure on gas exports on Wednesday, with sources saying it may take at least a month to return to normal production volumes.
Consequently, Petronet LNG informed buyers such as Indian Oil, Bharat Petroleum and GAIL about the evolving situation, indicating that gas users can expect a supply crunch in the coming days.
Qatar supplies 40 per cent of the 27 million tonnes of LNG India imports annually. According to energy intelligence firm Kpler’s tracking data, more than half of India’s LNG imports (from Qatar and UAE) pass through Hormuz, making the country particularly vulnerable to both physical supply disruptions and price shocks.
While domestically produced gas meets half of the domestic demand, India meets the rest through LNG imports, much of which are under long-term contracts.
While temporary cuts have been carried out for the industrial buyers, the same is now being extended to city gas distribution firms as well.
In a letter to GAIL on Tuesday, the Association of CGD Entities (ACE) stated that the reduction in supply of low-priced gas to 60 per cent and the restriction of spot or current market supply to zero “are likely to have a significant impact on gas availability to the sector, which may adversely affect priority segments.”
Sumit Ritolia, lead research anaylst at Kpler, said in a LinkedIn post that replacement LNG volume could come from the US, West Africa, Australia or Russia but longer shipping distances would mean higher shipping costs and slower delivery times.