Ras Laffan hit raises risks for India’s gas supply and economy

The widening conflict in West Asia has entered a critical new phase, with the targeting of energy infrastructure raising concerns of a prolonged global supply shock, and placing India in a particularly vulnerable position.

The latest flashpoint is the attack on Ras Laffan Industrial City in Qatar, one of the world’s most important liquefied natural gas (LNG) hubs. The strike, carried out by Iran in retaliation for Israel’s earlier attack on Iran’s South Pars gas field, marks a shift from indirect disruption to direct damage to production facilities — a development with far-reaching consequences.

From shipping disruption to supply crisis

Until recently, the conflict’s impact on energy markets had been largely confined to logistical bottlenecks, particularly around the Strait of Hormuz, a critical artery for global oil and gas shipments. Tankers were delayed, insurance costs surged, and supply chains tightened — but production remained largely intact.

The strikes on Ras Laffan signal a more dangerous escalation. According to QatarEnergy, missile attacks caused “extensive damage” to key facilities, including LNG trains and the Pearl gas-to-liquids plant. Six LNG trains — accounting for roughly 12.8 million tonnes per annum, or about 17 per cent of Qatar’s export capacity — were affected.

Qatar’s energy minister Saad Sherida Al-Kaabi said repairs could take between three and five years, with the country potentially declaring force majeure on long-term contracts. The financial hit is equally stark, with estimated annual revenue losses of around $20 billion.

This is not merely a regional issue. Qatar accounts for close to a fifth of global LNG trade, meaning that disruptions at Ras Laffan ripple across energy markets from Europe to Asia.

Why Ras Laffan matters globally

Ras Laffan is the backbone of Qatar’s LNG industry, handling the bulk of its production, processing and exports. In 2025 alone, Qatar shipped roughly 80 million tonnes of LNG — around 18–20 per cent of global supply.

Damage to such a concentrated hub has an outsized impact. Unlike shipping disruptions, which can ease relatively quickly, physical destruction of liquefaction infrastructure creates long-term constraints. Even if hostilities subside, supply recovery may take years rather than weeks.

Markets have already reacted sharply. Brent crude prices have surged past $110 per barrel, while natural gas benchmarks have climbed amid fears of prolonged shortages.

India’s exposure: a structural dependence

For India, the implications are immediate and severe. The country relies on imports for around 88 per cent of its crude oil, 60 per cent of its LPG and roughly half of its natural gas needs.

Qatar sits at the centre of this dependency. It is India’s largest LNG supplier, accounting for over two-fifths of total imports — most of it originating from Ras Laffan.

In 2024–25, India imported about 27 million tonnes of LNG, of which 11.2 million tonnes — roughly 41 per cent — came from Qatar. Long-term contracts underpin much of this trade, with companies such as Petronet LNG importing around 7.5 million tonnes annually, alongside smaller volumes handled by GSPC and GAIL.

Any disruption to Qatari supply therefore has a direct and immediate impact on India’s energy balance.

Early signs of strain

The effects are already beginning to show. With LNG flows disrupted and shipping routes constrained, India has reportedly started curtailing gas supplies to certain industrial users.

This reflects a deeper structural gap: India consumes roughly 189 million standard cubic metres per day of gas but produces only about 90. Imports bridge the deficit, a gap now under pressure.

A prolonged disruption could lead to cascading effects, including higher input costs for industries such as fertilisers, power and petrochemicals, as well as potential supply shortages.

Inflation, fiscal pressure and growth risks

The broader economic implications are equally concerning. Rising global energy prices tend to feed directly into domestic inflation, increasing the cost of transport, manufacturing and household energy.

For the government, this presents a difficult balancing act. Shielding consumers from price spikes often requires fiscal intervention, whether through subsidies or tax adjustments, placing additional strain on public finances.

Higher energy costs can also dampen economic growth by increasing operating expenses for businesses and reducing consumer spending power.

Beyond energy: trade and geopolitics

India’s ties with Qatar extend beyond energy. Bilateral trade exceeded $14 billion in 2024–25, with LNG, LPG and petrochemicals forming the backbone of imports.

A prolonged disruption risks upsetting this balance, potentially widening India’s trade deficit while also complicating diplomatic and commercial engagements in the region.

Diversification efforts — and their limits

India has, in recent years, sought to diversify its energy sources, increasing imports from countries such as the United States, Russia and Algeria. However, these efforts have only partially reduced dependence on the Gulf.

The reality remains that a significant portion of India’s energy imports, particularly LNG, is tied to West Asia, both in terms of supply and transit routes.

Even alternative suppliers may struggle to fill the gap quickly, especially in a tight global market where demand is already elevated.

A turning point in the conflict

The strike on Ras Laffan represents more than just another escalation in the US–Israel–Iran conflict. It marks a shift towards targeting the foundations of the global energy system itself.

For India, this transforms a distant geopolitical crisis into a direct economic challenge. What began as a disruption to supply chains now risks becoming a full-blown supply shock, one that could test the resilience of the country’s energy strategy in the months and years ahead.

With PTI, IANS inputs