Govt withdraws emergency gas supply curbs as LNG shipments via Strait of Hormuz resume

The Centre has rolled back most provisions of the emergency natural gas supply regulations imposed during the West Asia conflict after liquefied natural gas (LNG) cargo movement through the Strait of Hormuz resumed following a ceasefire agreement between Iran and United States.

Ministry Amends March 2026 Natural Gas Supply Regulation Order

In a notification issued on Saturday (4 July), the Ministry of Petroleum and Natural Gas amended the Natural Gas (Supply Regulation) Order, 2026, removing key operational provisions that had enabled the government to prioritise the allocation of domestically produced natural gas and imported LNG to essential consumers.

The original order, issued on March 9 under the Essential Commodities Act, was introduced after the conflict in West Asia disrupted LNG shipments through the Strait of Hormuz. During the crisis, several suppliers invoked force majeure clauses and redirected cargoes, prompting the government to step in to secure supplies for priority sectors.

Ceasefire and Resumed Hormuz Traffic Prompt Policy Reversal

According to the ministry, the situation has stabilised following the ceasefire, ongoing diplomatic negotiations and the restoration of maritime traffic through the strategically important Strait of Hormuz.

"The ongoing conflict in the Middle East that had resulted in the disruption of liquefied natural gas shipments through the Strait of Hormuz has been subject to a ceasefire, and negotiations are ongoing, as part of which, sea traffic through the Strait of Hormuz has been permitted to be resumed," the notification said.

How the February 28 Iran Strikes Triggered India's Emergency Energy Measures

The gas supply restrictions formed one of three emergency measures announced after energy supplies from the Gulf came under threat due to the effective closure of the Strait of Hormuz following US and Israeli strikes on Iran on February 28 and Tehran's retaliatory response.

The other two emergency measures—requiring refiners to maximise LPG production by diverting feedstock from petrochemical units and restricting diesel sales to bulk consumers—had already been withdrawn after fuel supplies returned to normal.

India's Heavy Reliance on West Asia for Crude Oil and LNG Imports

India, the world's third-largest importer and consumer of crude oil, relies on imports for nearly 88 per cent of its crude oil demand and about half of its natural gas consumption.

Around 40-45 per cent of India's crude oil imports and nearly 65 per cent of its LNG supplies originate from West Asia, highlighting the country's dependence on uninterrupted shipping through the Strait of Hormuz, a key transit route for Gulf energy exports.

Concerns over disruptions along the waterway had prompted the government to invoke emergency powers in March to protect domestic fuel and gas availability.

Why LNG Supplies Were More Vulnerable Than Crude Oil

While India was able to diversify crude oil procurement by sourcing supplies from alternative producers, natural gas imports remained particularly vulnerable because the majority of LNG cargoes from Qatar transit through the Strait of Hormuz.

As suppliers invoked force majeure during the disruption, the government introduced emergency regulations to ensure uninterrupted gas supplies for critical sectors.

Inside the March Emergency Order: Sector-Wise Gas Allocation Rules

The March order authorised the government to determine sector-wise allocation and diversion of domestic gas, LNG and regasified LNG to maintain supplies for priority consumers affected by the West Asia crisis.

Under the emergency framework, piped natural gas (PNG) households, compressed natural gas (CNG) used in transportation, LPG production facilities and pipeline operations were guaranteed 100 per cent of their average gas consumption over the previous six months.

Fertiliser manufacturers were assured 70 per cent of their average gas requirement, while industrial consumers connected to the national gas grid and city gas distribution networks were guaranteed 80 per cent of their average usage, subject to operational availability.

Refiners, Petrochemical Units and Power Plants Bore the Brunt of Cuts

To meet these commitments, the government had permitted cuts in gas supplies to petrochemical units and power plants while instructing oil refiners to reduce gas consumption to nearly 65 per cent of their average usage wherever operationally feasible.

GAIL's Role in Pooling and Redistributing Gas Supplies

The order also tasked state-owned GAIL, in coordination with the Petroleum Planning and Analysis Cell (PPAC), with pooling and redistributing gas supplies, determining a pooled price for diverted gas and implementing revised allocation schedules.

Gas producers, LNG importers, marketers, pipeline operators and city gas distributors were required to comply with the revised supply arrangements, while the emergency provisions temporarily superseded existing gas sale agreements and commercial contracts.

Government Says Emergency Measures No Longer Necessary

The government said these extraordinary measures were no longer necessary as the ceasefire had eased tensions, negotiations were progressing and shipping through the Strait of Hormuz had resumed. Consequently, it has omitted the provisions of the March 9 emergency order that enabled prioritised allocation of all available gas supplies.