India is currently facing a shortage of liquefied petroleum gas (LPG) as the conflict in West Asia has disrupted supplies. Petronet LNG Ltd, which effectively funnels about one-third of India’s gas supplies, invoked a force majeure clause with its largest supplier last week, after its liquefied natural gas (LNG) tankers were unable to reach Ras Laffan, a loading port in Qatar, due to the ongoing war between Iran and Israel. Two days later, QatarEnergy, the LNG supplier, issued its own force majeure to Petronet LNG. The ongoing war has brought maritime traffic in the Strait of Hormuz to a halt, a busy channel used to transport oil and gas to many countries, including India. The impasse has highlighted India’s dependence on gas imports, particularly from Qatar, and how that impact isspread across a range of sectors.
Import dependence
Over the years, natural gas has progressively come to play a greater role in India’s energy mix, supplementing crude oil (in the transport sector) and coal (in the power sector). According to government figures, natural gas accounted for about 7% of India’s total energy consumption in 2023-24, after coal (60%) and crude oil (29%). Natural gas is seen as a link fuel due to its lower carbon emissions, and India has set a target to increase its share to 15% by 2030. That was unlikely before, it’s even more unlikely now.
The disruption in West Asia means that about one-third of India’s energy basket is currently facing supply and pricing challenges. The share of imports in India’s gas basket has increased from about 28% in 2011-12 to 50% in 2024-25. Part of this increase is the result of India’s gas production shrinking by about 23% between 2011-12 and 2024-25. Meanwhile, imports doubled in the same period to meet growing gas demand in India.
LNG dynamics
For India, the chief mode of import of natural gas is LNG. This is natural gas that is liquefied to reduce its volume exponentially, making it economical and efficient to transport over long distances by ship (instead of pipelines). India’s LNG demand grew 50% in the last decade, but the trend is not smooth. This shows that structurally demand is growing, but it remains price-sensitive.
In India, two sectors accounted for about half the total consumption in 2024-25: fertilizers and city gas distribution (CGD). CGD comprises domestic piped gas connections and CNG for vehicles—direct touchpoints with households—and the share of this sector in gas consumption has nearly doubled in the past decade.
India had around 8,600 CNG stations and 16.2 million domestic piped gas connections as of December 2025. About 73% of these connections are in four states: Delhi, Uttar Pradesh, Gujarat, and Maharashtra. These four states account for 80% of commercial and 60% of industrial connections.
Production constraints
In the context of energy self-sufficiency, one of the structural problems for India has been its inability to ramp up domestic production of natural gas. Between the peak in 2011-12 and 2020-21, domestic production dropped 40%. Production has picked up since, but is still about one-fourth below its 2011-12 peak.
The main reason for the drop in domestic production was the collapse of output from KG-D6, an offshore block owned by Reliance Industries and British Petroleum along the coast of Andhra Pradesh. It has been revived after 2021, along with investments by government-owned ONGC in the same area, but production hasn’t reached the 2011-12 peak. When it comes to new players and new capacity, the government introduced the Open Acreage Licensing Policy (OALP) in 2017 to allot blocks to interested companies on a continuous basis. This policy gave companies greater freedom to choose oil and gas blocks, and was based on a revenue-sharing model and lower royalty rates. Blocks have been allotted, but discoveries and production will take time.
Qatari reliance
In the absence of ample domestic gas production, or even visibility of an increase, India has no choice but to rely on imports in a big way. Even in imports, there is one country that India has an outsized dependence on: Qatar. In each of the last eight years, 40-50% of India’s natural gas has come from Qatar, via the Strait of Hormuz. India's top two gas trading and distribution companies, Petronet LNG and GAIL (India), have long-term arrangements to procure large quantities of LNG from Qatar.
According to the International Energy Agency, in 2023, Qatar was the sixth-largest producer of natural gas, after the US, Russia, Iran, China, and Canada. India was ranked 22nd, with its output matching only a fifth of Qatar’s. The Qatari reliance is hitting India hard. With stocks running low, the Indian government is looking to divert existing supplies to piped gas connections and vehicle gas stations.
LPG Imbroglio
India has set an ambitious target of 120 million piped gas connections by 2030—a seven-fold increase from current levels. Without reviving domestic output, India will increasingly become captive to imports, exposing the economy to supply and price risk. The other alternative to piped gas is LPG, which is a more common occurrence in Indian households than piped gas.
LPG is extracted through oil refining, whereas LNG is derived from natural gas fields. But in terms of supply, India’s import dependence on LPG is similar to LNG. More than half of the consumption is covered through imports from West Asia. In 2010-11, India imported about 32% of its LPG supply. This has nearly doubled to 62% in 2024-25. A prolonged disruption in LNG and LPG imports will hurt India. Supply from India’s long-term gas contracts is captive to the reopening of the Strait of Hormuz. And purchases in the spot market will be relatively expensive.
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