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India's urban gas supply chain under pressure
The escalating conflict in the Middle East is casting a shadow over India's expanding piped natural gas (PNG) network, which delivers fuel directly to millions of homes and vehicles across the country.
Growth in domestic gas connections
India's push to replace traditional LPG cylinders with piped gas has gained momentum in recent years. The country now has over 15 million PNG connections, with urban households increasingly adopting the convenience of gas on tap. Compressed natural gas (CNG) for vehicles has also seen steady growth, becoming the second-most popular automotive fuel after petrol.
Supply composition and vulnerabilities
India's piped gas supply relies on a mix of domestic production and imported liquefied natural gas (LNG). Approximately half comes from local fields operated by companies like ONGC and Reliance, while the remainder is sourced through LNG imports. This dual dependency exposes the system to global market fluctuations, particularly in times of geopolitical tension.
Priority sectors protected amid supply constraints
Government policy prioritizes household and vehicle gas supplies during shortages. Rahul Chopra, managing director of Haryana City Gas Distribution Limited, stated, "No disruption is expected for homes and vehicles. The government has given priority to these two sectors." However, around 2,200 of Chopra's industrial and commercial clients face a mandated 20% supply reduction as gas is redirected to residential and transportation uses.
Global supply chain exposure
India imported approximately 24-25 million tonnes of LNG in 2025, with over half sourced from Qatar through long-term contracts. The Strait of Hormuz, a critical maritime chokepoint now at the center of regional conflict, handles 50-55% of India's LNG imports. While recent cargoes continue to arrive, exports from Qatar's Ras Laffan LNG complex have been suspended since March 2, raising concerns about future shipments.
Storage limitations amplify risks
Unlike crude oil, India maintains no strategic LNG reserves. Gas is stored primarily as working inventory at regasification terminals, covering only one to two weeks of imports. Go Katayama, principal insight analyst at Kpler Insight, noted, "The system relies on a steady rhythm of ship arrivals. Any interruption forces rapid market adjustments."
Price hikes loom for consumers
While immediate shortages are unlikely for urban households, prolonged disruptions at Hormuz would likely trigger price increases. Chopra acknowledged, "There is some price rise expected." Industrial users, already facing supply cuts, would bear the brunt of these adjustments, potentially shifting to alternative fuels like coal or fuel oil.
