Government adjusts domestic gas allocation to prioritise LPG, CNG

Domestically produced natural gas will now be supplied on priority to units producing LPG (liquefied petroleum gas), CNG (compressed natural gas) and piped cooking gas, a government gazette notification said late Monday.​

The move addresses disruptions in LNG imports through the Strait of Hormuz, stalled by the US-Israeli conflict with Iran, with suppliers invoking force majeure, the Petroleum and Natural Gas Ministry said.

Under the revised order, these three sectors will receive 100 per cent of their average past six months' consumption first, before supplies to fertiliser plants (70 per cent), tea estates and industries (80 per cent), and city gas distributors (80 per cent to commercial users).

State-owned GAIL (India, established 1984) will manage allocations, curtailing supplies to petrochemicals, power plants and refineries (to 65 per cent), which use high-priced imported gas, the notification said.

Pipeline compressor fuel and operational needs are also prioritised to keep networks running.

Fertiliser units must use gas solely for production, with no diversions allowed, it added.

India-West Asia linkage

India consumes 191 million standard cubic metres of natural gas daily, half from domestic sources like KG Basin fields. The strait handles one-fifth of global oil and a third of LNG, including most Indian imports, now hit by stalled tankers and surging insurance amid Iranian Fateh-360 missile launches (Iran, introduced 2019).​​

LPG, derived from natural gas processing or oil refining, powers 300 million households; CNG fuels urban transport; piped gas serves city kitchens.

The rejig ensures cooking fuel and transport continuity amid volatility, with reserves covering 10-12 days for LPG.

Domestic output has prioritised CNG and piped gas since 2022, but LPG joins top tier due to March 2026 Hormuz blockade from IRGC threats and US retaliation, forcing import cuts. Similar diversions occurred during 2022 Russia-Ukraine war; fertiliser subsidies rose Rs 2 lakh crore last year to offset gas costs. No timeline given for reversal