India Prioritizes Domestic Gas Use Over Industry

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

India has enacted a number of emergency measures to prioritize the domestic use of gas over industry in an effort to deal with pressures caused by the Middle East crisis. 

India's government has enacted emergency measures to prioritize the use of gas for domestic use and transport at the expense of petrochemical facilities, refineries and power plants.

Domestic Over Industry

Gas distributors are to prioritise domestic natural gas and regasified liquefied natural gas (LNG) to supply to the city gas distribution (CGD) network, as the country aims to avert domestic shortages and protect essentials. "The Central Government has assessed that the ongoing conflict in the Middle East has resulted in the disruption of liquefied natural gas (LNG) shipments through the Strait of Hormuz and suppliers have invoked force majeure clause which would entail diversion of natural gas to the priority sectors," stated the oil ministry. India gets around half of its crude oil imports, up to 60% of its LNG and 80% of its liquefied petroleum gas (LPG) through the Strait. 

Priority Areas

The Natural Gas (Supply Regulation) Order, 2026, states that the supply of natural gas to the following sectors shall be treated "as priority allocation and shall be maintained at 100%" of their average supplies over the last six months:

• Domestic piped natural gas supply for household cooking;
• Compressed natural gas for transport;
• Liquefied petroleum gas (LPG)  productio, including LPG shrinkage requirements;
• Pipeline compressor fuel and other essential pipeline operational requirements;

Now in its second week, the bombing of Iran by U.S. and Israeli forces and the subsequent missile attacks by Iran on surrounding countries has led to a virtual halt of oil and gas shipping through the Strait of Hormuz. Around 60% of India's LPG comes via Hormuz. 

Fertilizers 

The second priority area are fertilizer plants - crucial for agricultural output and food security - which will get 70% of their past six month average gas consumption, "subject to operational availability." The gas can only be used for fertilizer production. India's agriculture sector supports just under half the population, generates 16% of gross domestic product (GDP), and the country is a major exporter of fertilizers and other agricultural products to the Middle East. Its fertilizer industry relies on LNG imports from the Middle East. For up-to-date information on the impact the war is having on Middle East LNG supplies, read March 6, 2026, article - Middle East Conflict Creates LNG Bottleneck.

Big Hit for Refineries

The third priority sector covers tea industries, manufacturing and other industrial consumers supplied through the national gas grid, with an allocation of 80% of their six-month averages. To cover this, there will be "full or partial curtailment of gas" supplied to  petrochemical facilities, including ONGC Petrol Additions Limited, GAIL Pata Petrochemical Complex, Reliance's oil-to-chemical units and other high-pressure high-temperature (HPHT) gas consumers and finally, gas-fired power plants. Refineries have been told to divert propane, butane to LPG production, used by most Indians for cooking, and to sell that LPG to the country's three state-owned suppliers: Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limted (BPCL) and Hindustan Petroleum Corporation Limited (HPCL). They have also been instructed to "not divert, utilise, process, crack, convert or otherwise employ propane or butane streams for manufacture of petrochemical products or other such downstream derivatives".

'No Room for Anxiety'

In the past week, the government has been vocal about how it has the deteriorating situation under control, in an effort to stave off panic. Petroleum Minister Hardeep Singh Puri told media: "We discussed how India is navigating the trilemma of energy availability, affordability and sustainability in the face of the current geopolitical challenges. Energy imports into the country are in full flow from all non-Hormuz routes. The energy requirements of our citizens are being fully met. India is in a comfortable position. There is no room for anxiety or speculation in this regard."

Key Takeaways

• India is prioritizing the use of gas for domestic and transport use first over industrial usage thanks to the Middle East conflict.
• Partial or full cuts in gas supplies will be made at petrochemical facilities, refineries, and power plants.
• India, like Europe and Asia, is feeling the impact of shipping stoppages through the Strait of Hormuz.

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