LPG, CNG get priority as Centre revises gas allocation amid West Asia conflict

New Delhi, Mar 10: The Central government has revised the priority for allocating domestically produced natural gas, giving the cooking gas and transport sectors first charge to meet their full requirements before supplies are made to other sectors.

The move comes amid disruptions in global energy supplies due to the widening conflict in West Asia.

Under the revised order, the government has curtailed gas allocation to sectors such as petrochemicals to ensure that the full requirement of fuel used to produce cooking gas (LPG), compressed natural gas (CNG) for automobiles and piped cooking gas for households is met.

Domestic gas production currently meets about half of India’s daily consumption of 191 million standard cubic metres.

Supplies will now be diverted to priority sectors by reducing allocations to petrochemical plants, power units and other high-priced gas consumers.

“The gas required to meet the priorities shall be through full or partial curtailment of gas supplied in the following order of priority: (a) petrochemical facilities, including ONGC Petro Additions Ltd, GAIL’s Pata Petrochemical Complex, Reliance O2C and other high-pressure high-temperature (HPHT) gas consumers; and (b) power plants, as required,” a gazette notification said.

The fertiliser sector has been placed second in the priority list, with at least 70% of its average demand over the past six months to be met.

At the third level, gas supply to tea industries, manufacturing units and other industrial consumers will be maintained at 80% of their average gas consumption over the past six months, subject to operational availability.

City gas distribution (CGD) entities supplying gas to industrial and commercial consumers have been placed fourth in the priority order.

The government’s move follows disruptions in energy supply chains after the escalation of the West Asia conflict, which has affected around 80% of India’s 21-million-tonne LPG imports.

In response, refineries have been directed to boost domestic LPG output by diverting petrochemical streams and increasing the use of natural gas to support cooking fuel supplies.

The crisis has already pushed up global energy prices, reflected in a Rs 60 increase in the price of a 14.2-kg LPG cylinder over the weekend.

Following US-Israeli strikes inside Iran and Tehran’s retaliatory attacks across the region, maritime traffic through the Strait of Hormuz has sharply declined, insurance premiums have surged and energy markets have reacted with immediate volatility.

The strategic waterway carries roughly one-fifth of the world’s seaborne oil and nearly one-third of global LNG shipments.

“The central government has assessed that the ongoing conflict in the Middle East has resulted in disruption of liquefied natural gas (LNG) shipments through the Strait of Hormuz, and suppliers have invoked the force majeure clause,” the notification said, adding that the supply curbs would enable diversion of gas to priority sectors.

PTI