Shares of Petronet LNG Ltd have fallen nearly 10% this week, though they have recovered somewhat from Wednesday’s intraday plunge of 16%, as the conflict in West Asia rattled investors. The state-owned company has been hit hard by the shutdown of a key supplier, QatarEnergy’s liquefied natural gas (LNG) liquefaction plant, after an aerial attack on its facility.
Petronet procures 8.5 million tonnes per annum (mmtpa), about half of its LNG requirements, from QatarEnergy’s 82 mmtpa Ras Laffan facility, the world’s largest LNG plant. Petronet operates LNG terminals that import the fuel, regasify it and sell it to consumers.
Importers are also grappling with evacuation challenges following the blockade of the Strait of Hormuz by Iranian forces. Given the prevailing security situation and the risks to maritime navigation, Petronet has issued a force majeure notice to QatarEnergy for three LNG tankers—Disha, Raahi, and Aseem.
The disruption has sent LNG spot prices soaring, doubling week-on-week to about $25 per mmbtu (million British thermal units), according to Bloomberg. Gas prices tend to react sharply to supply shocks because the market has fewer alternative sources and limited storage capacity.
Emkay Global Financial Services estimates Petronet’s Dahej plant utilization to fall to 77% in the March quarter (Q4FY26), from 97% in Q3, if the Qatar disruption lasts for the full month. In a recent statement, Petronet has said that ‘acts of war’ is not included under the business interruption insurance cover it has. Thus, the impact of the conflict on the company could be higher.
The conflict also arrives at an awkward time. Petronet was already contending with softer market conditions, marked by lower gas volumes amid rising competition and muted demand from industries and the power sector. Total gas volumes handled by the company fell 6.6% in the nine months ended December (9MFY26), while Ebitda declined a sharper 13%.
There is, however, a potential offset. The Kochi-Mangalore-Bangalore gas pipeline, expected to connect to the national gas grid by June, could lift volumes in the southern region. That would help improve utilization at the Kochi terminal, which has been running well below capacity, averaging 26% in 9MFY26 and 23% in FY25.
Valuations offer some comfort. Petronet’s shares now trade at about 10x estimated FY27 earnings per share, according to Bloomberg consensus, a steep discount to the long-term average multiple of 12.2x. A quick easing of the conflict, or assurances of safe passage through the Strait of Hormuz, could help stabilize operations and limit the damage.
US President Donald Trump has assured that the US Navy would escort tankers through the strait, and that the US Development Finance Corp. would provide insurance cover for transit, which could offer investors some relief if implemented.