Govt may re-prioritise gas allocation across sectors if supply tightens amid Gulf tensions

Officials said domestic refineries currently have sufficient reserves. “Govt Official: All our refineries have enough crude oil stocks.”

• India ensures steady fuel supply amid West Asia conflict
• India has 50 days of crude oil and refined product reserves
• Officials monitor Qatar LNG output and diversify supply channels

Did our AI summary help?

The Indian government may re-prioritise gas allocation to different sectors in case gas supply tightens amid the escalating Gulf tensions and shut down of QatarEnergy's LNG production facility, government sources said.

"If gas supply tightens, the country can look at several options including re-prioritisation of gas allocation among various industrial sectors as alternate fuels are available. Any deficit (in gas supply) is managed in a manner that no one is at inconvenience,” official sources said.

Indian authorities are closely watching developments related to QatarEnergy’s LNG output after the company halted LNG production at its Ras Laffan hub after an Iranian drone strike hit the facility on March 2.

Parallelly, India’s largest LNG terminal operator, Petronet LNG, has also invoked force majeure for its affected tankers after insurers pulled out of key Middle East routes leading to choking of supplies in the Strait of Hormuz. State-run Gail India also said that allocation of LNG quantities to the company has been reduced to zero with effect from March 4, 2026 due to supply restrictions imposed by Petronet LNG.

“Our main concern is shutting Qatar's LNG production facility because 25% of global LNG supply comes from Qatar," said the official.

Officials also noted that energy companies have had to invoke contractual provisions due to the situation in the region. “Petronet LNG and Gail India had no other option but to declare force majeure (amid the escalating West Asia conflict). It is legally required to declare force majeure in a state of war. We are in touch with all the entities.”

India presently consumes 195 Million Standard Cubic Meters per Day (MMSCMD ) of natural gas. “Of this, 60 MMSCMD is not available due to force majeure of QatarEnergy’s LNG production facility and disruption of Strait of Hormuz,” sources said.

On the concerns of LPG supplies being at risk, officials said that there is no dearth of LPG and India has enough crude and refining capacity to make LPG.

India in discussions with US for risk insurance on energy shipments

India is in discussions with the US authorities and the International Development Finance Corporation for risk insurance and guarantees for financial security of its maritime trade traveling through the Strait of Hormuz as the escalating tensions in West Asia has put India’s energy supplies at risk, government officials said.

Movement of ships through the Strait of Hormuz, which carries about 20 percent of the world's crude and nearly half of India’s total monthly oil imports, has come to a standstill, as Iran continues to hit targets across West Asia in response to attacks by the US and Israel.

The strait lies between Oman and Iran and links the Gulf north of it with the Gulf of Oman to the south and the Arabian Sea beyond.

US President Donald Trump on March 4 announced that the United States Development Finance Corporation (DFC) will provide, at a very reasonable price, political risk insurance and guarantees for the financial security of all maritime trade, especially energy, traveling through the Gulf.

“This will be available to all Shipping Lines. If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible. No matter what, the United States will ensure the free flow of energy to the world,” Trump said in a post on Truth Social.

India is closely coordinating with global energy organisations and suppliers to ensure uninterrupted fuel supplies amid the ongoing conflict in West Asia, government officials said.

“India has adequate crude oil and LPG supplies and is coordinating with international partners to manage risks to maritime trade and energy flows,” a top government official told Moneycontrol.

India looking at alternate supplies, has 50 days oil and products stock 

“India is in touch with the International Energy Agency, Organisation of Petroleum Exporting Countries, ministers across the countries amid the ongoing West Asia conflict,” the official said.

According to the sources, India is coordinating with a wide range of global suppliers and trading houses to secure energy supplies. “India is in touch with all major suppliers, companies for their international portfolios and trading entities like Trafigura, Vitol for LPG and crude oil.”

They also emphasised that the country has sufficient reserves to manage the situation. “India is in a very comfortable position with 50 days of crude oil and refined products stock which is constantly being refurbished,” sources said.

Officials added that efforts are underway to diversify supply channels. “India is negotiating with a large number of partners all over the world,” the official said, adding that India continues to buy oil from Russia. However the quantity of Russian oil imports declined in February.

“There is no shortage of oil in the world. There is more oil coming to the market,” the official said.