New truncated gas allocation regime still faces a large LNG shortfall

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.

- S DINAKAR

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.

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 StatesIsrael 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.