GAIL buys Oman LNG cargo as India secures gas supply amid Strait of Hormuz disruption

West Asia conflict: GAIL has purchased a liquefied natural gas (LNG) cargo from Oman as India moves to secure supplies to meet rising natural gas demand, three trade sources told Reuters. According to the sources, the state-run gas company bought the prompt cargo for delivery next week from a European trader through a negotiated deal at a fixed price of about $17–$20 per million British thermal units (mmBtu).

Shipping data from Kpler shows that the cargo, loaded on the vessel Orion Hugo and chartered by Shell, is expected to arrive in India around March 15. GAIL did not immediately respond to requests for comment.

India meets nearly half of its daily natural gas requirement of about 195 million standard cubic metres per day (mmscmd) through imports. Prior to the recent disruption, the country was receiving around 60 mmscmd of gas from the Middle East. Supplies have been affected after the closure of the Strait of Hormuz and force majeure declared by Qatar, India’s largest gas supplier.

To manage the shortfall, the government has begun rationalising gas distribution, diverting supplies from non-priority sectors to essential users following the disruption in shipments.

LNG disruptions

The escalating conflict in the Middle East has begun to disrupt global energy flows, raising concerns over fuel availability in several importing nations, including India. The situation intensified after LNG shipments through the Strait of Hormuz, one of the world’s most critical energy routes carrying nearly 20 percent of global liquefied natural gas trade, were affected, tightening supply in international markets and pushing governments to activate contingency plans.

Amid disruptions in gas procurement from West Asia due to the Iran conflict, the Centre has invoked emergency powers to ensure that essential fuel requirements within the country are protected. Authorities have decided to divert gas supplies away from non-priority sectors and redirect them to critical uses such as domestic cooking gas, transport fuel and emergency services including hospitals.

Under the revised allocation mechanism, the available liquefied natural gas will first be used to fully meet the requirements of LPG production, CNG for transport, and piped natural gas (PNG) for households, which together form the highest priority category. Officials said the current plan ensures 100 percent supply for these essential segments, while about 80 percent of fuel demand for commercial users and nearly 70 percent of requirements for fertiliser plants will be met with the remaining gas.

The government formalised the move through a gazette notification issued late Monday under the Essential Commodities Act, 1955, giving it the authority to override existing supply contracts and commercial agreements related to LNG distribution. The diverted gas will now be reallocated based on the average consumption pattern of the last six months so that priority users do not face shortages.

Officials also noted that domestic LPG production from regular refining streams is already operating close to capacity. To bridge the gap, refineries have been instructed to maximise output by diverting feedstock from petrochemical production toward cooking gas manufacturing wherever feasible.

Under the updated priority framework, supply to the domestic piped gas network, LPG bottling units and CNG distribution will be treated as essential allocation, followed by fertiliser producers and commercial consumers. Gas will be supplied to other industries only after the needs of these sectors are satisfied, as the government attempts to maintain stability in fuel availability during the ongoing geopolitical crisis.