Iran conflict threatens India's gas supply: What we know
What's the story
The ongoing conflict in Iran has raised concerns about the security of India's piped natural gas (PNG) supply. The country relies on a mix of domestic production and liquefied natural gas (LNG) imports for its PNG needs. While half of the supply comes from domestic sources, the other half is met through LNG imports, making India one of the world's biggest buyers.
Import dependence
LNG imports and the Strait of Hormuz
India's LNG imports are largely sourced from Qatar, with over half of the country's imports coming from long-term contracts with Qatari suppliers. However, these shipments must pass through the Strait of Hormuz, a critical maritime chokepoint that is now a flashpoint in the Middle East conflict. Despite this risk, supplies have not been completely disrupted yet as cargoes loaded before the conflict continue to arrive in Asia.
Supply cut
Qatar's Ras Laffan LNG complex exports suspended
However, exports from Qatar's Ras Laffan LNG complex have been suspended since March 2. This could lead to a supply crunch for about 2,200 of Haryana City Gas Distribution's industrial and commercial customers who are already facing a government-mandated 20% supply cut. The government is prioritizing households and vehicles using piped gas over industries in this situation.
Price impact
Price hike expected for urban consumers
The immediate risk for urban consumers using piped gas is a price hike, not a shortage. If disruptions at Hormuz continue, India's gas market will adjust through higher prices and weaker industrial demand. Rahul Chopra, managing director of Haryana City Gas Distribution Limited, was quoted as saying by the BBC, "There is some price rise expected." This means households may continue to have access to gas, but at a higher cost.