New Delhi: India imports around 50% of its liquefied natural gas (LNG) requirements from West Asia, and most of it is sourced from Qatar. With the ongoing blockade of the Strait of Hormuz and attacks on Ras Laffan industrial City, a large chunk of India's imports are halted. This supply crunch may impact several downstream industries in India including fertilizers and steel. Mint takes a look at the impact of war on the country's gas supplies.
Q. How has the war in West Asia impacted global LNG supplies?
About 20% of global LNG supplies come through the Strait of Hormuz, which has almost come to a halt since the war started on 28 February and the eventual blockade of the strait. The attacks on the Ras Laffan industrial city and LNG project of QatarEnergy has significantly hit the production and capacity of the company. The CEO QatarEnergy Saad Sherida Al-Kaabi said that missile attacks on its Ras Laffan plant reduced Qatar’s LNG export capacity by 17% and caused an estimated loss of $20 billion in annual revenue. Extensive damage to its production facilities would take up to five years to repair and have compelled the firm to declare long-term force majeure, he said, which would impact several Qatari gas buyers.
Q. What has been the price trend of natural gas globally since the start of the war?
Since the start of the West Asian war, natural gas prices have witnessed significant volatility. The US natural gas futures rose nearly 13% to $3.23 per metric million British thermal unit (MMBtu) since the start of the war. At the time of writing the article, it was at $3.01 per MMBtu. Prices have surged further in Asia. Spot prices in Asia, referenced by the Japan/Korea Marker, JKM, have surged to three-year highs to around $22 per MMBtu, more than doubling from around $10 on 27 February.
Q. How dependent is India on imports for its LNG supplies?
India imported about 27 million tonnes of liquefied natural gas in the last financial year (FY2025) worth $14.9 billion. Of India's total LNG imports, about 40-45% comes from Qatar and other key suppliers in West Asia, including the UAE and Oman. The US and Australia are the other sources of LNG. Although India produces about half of its natural gas requirement, a majority of its domestic production is used for city gas distribution (CGD), including piped natural gas (PNG) for cooking and compressed natural gas (CNG) for transport. So, other downstream consuming sectors like fertilizers, steel and power are mostly dependent on imported natural gas.
Q. What has been the impact of the supply crunch?
India, along with other energy-importing nations, has been impacted by the supply squeeze owing to the war in West Asia. Following QatarEnergy's announcement of force majeure of its operations this month, as its Ras Laffan plant was hit, Petronet announced force majeure for consumers in India. The government has already cut supplies to industries and fertilizer plants to prioritize availability for domestic consumers. The fertilizer sector has been allocated 70% of its average natural gas consumption in the past six months, and other industrial consumers like tea and manufacturing units would get 80% of their pre-war average supplies. According to reports, the steel industry sought government support to increase allocations of LNG and propane, a key component of liquefied petroleum gas (LPG), whose supplies have also been curtailed for non-domestic consumers.
Q. What are the ways to mitigate the impact of the war?
Apart from reprioritizing the supplies of natural gas with focus on cooking and mobility, the government is also making efforts to diversify the country's LNG imports. India is looking to increase LNG supplies from Australia, the US, and Algeria, as well as from global portfolios of LNG trading and production companies. India is looking to increase domestic production of LNG, along with crude oil. A recent report by the Standing Committee on Petroleum and Natural Gas said that India has proven natural gas reserves of nearly 1.3 trillion cubic meters and oil reserves of around 4.5 billion barrels.