LNG is the weakest link in India’s fuel-supply chain.

Photograph: Yuriko Nakao/Reuters

India’s plans to ration the consumption of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) — in response to reduction in their import owing to war in West Asia — may fall short of what is needed to meet domestic needs.

Refiners are finding it difficult and logistically complex to source adequate amounts of fuel, especially LNG and LPG, from sources other than West Asia even if they pay high premiums.

This is because supplies have disappeared fast as war entered the 12th day, according to industry officials, traders, analysts and shipping databases.

What is the LNG situation in India?

Take LNG, the weakest link in India’s fuel-supply chain.

India needs 1-1.5 million tonnes of LNG a month — or around 23 cargos, accounting for over half the country’s monthly fuel imports — which were disrupted after a key  waterway was blocked.

But there were import tenders for only around three cargos as of Wednesday, Business Standard has learnt.

In February, prior to the United States-Israel attack on Iran, Qatar and the United Arab Emirates together supplied 1.5 million tonnes in January and 1 million tonnes in February.

These supplies dropped to 190,000 tonnes in March to date, the Kpler data showed.

“South Asia’s LNG market faces a major supply shock following the closure of the Strait of Hormuz, with regional demand expected to be 2-3 million tonnes (mt) lower through Q3 2026, compared to pre-crisis projections, as countries struggle to replace disrupted Qatari supplies,” said a note on Thursday by global consultant Wood Mackenzie.

“QatarEnergy’s force majeure threatens around 20 per cent of global LNG supply and creates severe supply pressure for South Asian importers.”

“Procurement through alternative routes is underway,” an official in the oil ministry said at a media briefing in New Delhi on Wednesday.

“Two LNG cargos are on their way to the country,” said the official, without giving details.

How much LNG cargo India received?

Putting that in context, India received 28 cargos in February and 38 parcels in January, averaging one a day.

India received 10 cargos in March to date, the Kpler data showed.

And three spot LNG cargos were awarded via tenders at a premium, according to local traders and Argus, a publication on energy prices based in the United Kingdom.

GSPC secured a Nigerian parcel at $21 per million British thermal units (mBtu); Gail and Indian Oil secured cargos from Oman at $16-18 per million Btu.

“While the region is highly dependent on LNG from West Asia, South Asian buyers will find it hard to replace disrupted Qatari volumes due to increase in competition for available spot LNG cargos, something which has pushed LNG prices above $20 per mBtu,’’ said Akshay Gupta, research analyst (gas & LNG), Wood Mackenzie.

The three spot cargos, put together, total around 210,000 tonnes, leaving a gap of over 1.2 million tonnes.

How govt plans to tide over the vast gap between demand and supply

To tide over the vast gap between demand and supply, the government this week trimmed allocations of natural gas for consumers.

But curtailed volumes would still need around 25 cargos of LNG a month, according to calculations by Business Standard based on the oil-ministry data.

Supplies from West Asia reach normally in three-four days, while those from West Africa and the United States take between 20 and 45 days, because India’s second-most important waterway for energy imports, the Suez Canal, is under attack from Houthi rebels, prompting a costly diversion around the Cape of Good Hope.

That means any alternative supplies must be loaded by now to reach India in the last week of March, an official from a state-run refiner said.

But loadings of LNG cargo from exporting nations, which give visibility to the government’s demand management in India, are few, according to the ship-tracking data accessed by Business Standard.

Loadings of LNG cargo

March loadings for India totalled around 10 LNG cargos, expected to reach later this month.

Nigeria has loaded three cargos; the US loaded none.

Qatar, which delivered 16 cargos to India in January, has declared force majeure.

The UAE, which counts India as its biggest customer, has loaded only one cargo. Oman, located outside the Strait of Hormuz, is the only West Asian nation that can ship to India, but it is pulling back vessels because of Iranian attacks on its oil infrastructure.

Based on the oil ministry’s January data for the biggest LNG-using sectors, back-of-the-envelope calculations show even at lower allocations, fertilisers, India’s biggest LNG user, alone will need 11 LNG cargos a month, reflecting the wide gap between demand and supply.