India's gas stocks up by 20% today: What's the reason?
What's the story
Shares of city gas distribution and gas infrastructure companies witnessed a major spike today. The rally was led by Adani Total Gas, which saw its shares jump by an impressive 19.95% to ₹569. The surge in these stocks comes after the Indian government took steps to secure domestic gas supplies and ramp up Liquefied Petroleum Gas (LPG) production, amid disruptions caused by the ongoing Middle East conflict.
Market response
Other gas players also see gains
The positive market response wasn't limited to Adani Total Gas. Other major players in the sector, like Gujarat Gas and Gujarat State Petronet, also witnessed significant gains of nearly 7.7% and about 5.9%, respectively. Indraprastha Gas, Mahanagar Gas, Petronet LNG and state-run GAIL (India) also saw their shares trade higher today amid these developments in the gas sector.
Policy measures
Government invokes emergency powers to prioritize gas supply
The surge in gas-related stocks comes after the Indian government invoked emergency powers to prioritize gas supply for essential sectors. These include piped natural gas (PNG) for households, compressed natural gas (CNG) for transport, and LPG production. The Ministry of Petroleum and Natural Gas has issued a directive under the Essential Commodities Act, 1955, treating these sectors as priority allocations at 100% of their average consumption over the last six months.
Production boost
Refiners directed to maximize domestic LPG production
In a bid to prevent shortages amid the ongoing geopolitical disruptions, the Centre has directed refiners to maximize domestic LPG production and ensure adequate stocks for household consumers and essential sectors. Officials have said that the country's LPG output has already been increased by around 10%, with arrangements being made for imports from alternative suppliers. Reliance Industries is also working on optimizing refinery operations at its Jamnagar complex to boost LPG output.
Supply stability
Oil prices soften on reports of strategic reserves release
Despite the ongoing geopolitical disruptions, officials have assured that India's overall crude oil supply position remains stable. Refining capacity utilization has returned to the full levels, with imports from non-Hormuz sources rising to about 70% of total inflows. This comes as oil prices softened in global markets, with the Brent crude slipping below $88 per barrel after reports that the International Energy Agency could consider a large release of strategic reserves to offset supply disruptions from the Gulf region.