India has imposed stringent emergency measures to ensure the country’s domestic supplies of liquefied petroleum gas (LPG) and natural gas for households, amid severe maritime disruptions in the Strait of Hormuz. Furthermore, the ongoing geopolitical tensions in West Asia have virtually closed vital shipping routes through the chokepoint, with key suppliers declaring force majeure. India sources about 60% of its LPG needs through imports, with nearly 90% of those deliveries from the Middle East, making the supply squeeze a cause of energy shortages and long lines at distribution points in the country.
The Ministry of Petroleum has directed for 100% priority allocation of gas for City Gas Distribution (CGD) network for household cooking and compressed natural gas (CNG) for transport, to protect citizens from the crisis and to protect the critical sectors. Domestic refiners have also been ordered to maximize LPG yields by allocating all available propane and butane streams only to state-owned oil marketing companies. This directive categorically bans refineries from channeling these hydrocarbons to the production of petrochemicals or to downstream industrial derivatives.
The emergency intervention has saved the supply lines of India’s 330 million domestic connections, but has hit the commercial and industrial sectors hard. Gas supplies to petrochemical plants, power plants and oil-to-chemical plants have been curtailed deeply or completely. In addition, the government has halted piped natural gas (PNG) consumers from buying individual LPG cylinders, introduced mandatory delivery authentication codes to prevent fuel black-marketing and strictly capped commercial gas supplies to improve efficiency and curb panic buying. State oil marketing companies still face large under-recoveries on subsidised retail fuel, even as the government is actively working to diversify import origins away from the blocked maritime corridor.
