Qatar declares force majeure, gas supplies to Indian industry cut

Qatar, India's largest supplier of imported natural gas, has declared force majeure on deliveries following a halt in production in the wake of an Iranian drone strike—a disruption that has led to a cut in supplies to Indian industry by up to 40 per cent, sources said. A force majeure is declared in unforseeable circumstances that prevent one from fulfilling a contract.

Qatar supplies about 40 per cent of the nearly 27 million tonnes of liquefied natural gas (LNG) that India imports annually to meet demand across sectors ranging from power generation and fertiliser production to CNG distribution and piped cooking gas networks.

Gas importer Petronet LNG Ltd has informed gas marketers of Qatar halting its liquefied natural gas production after Iran continued to strike Gulf countries in retaliation for Israeli and US strikes against it, they said.

The attacks have also effectively brought oil and LNG shipments through the Strait of Hormuz to a near halt, driving up global energy prices as well as sharply raising war-risk insurance and shipping costs.

Iran controls the Strait—a vital maritime chokepoint through which roughly 50 per cent of India's crude oil imports and around 54 per cent of its LNG supplies transit. It is the transit for not just LNG from Qatar but also from the UAE.

Sources said Petronet has informed its gas offtakers, GAIL (India) Ltd and Indian Oil Corporation (IOC), about a halt in supplies from Qatar. The gas marketers have, in turn, cut supplies to industries while maintaining flow rates for CNG retailing.

The cuts range from 10 per cent to 40 per cent, they said.

Petronet has long term contract to buy 8.5 million tonnes per annum of LNG from Qatar. Additionally, it buys Qatari LNG from the spot market as well. Besides Petronet, companies such as IOC have LNG import contracts with the UAE.

Sources said GAIL and IOC are looking at tapping the spot or current market to meet the shortfall, but prices have firmed up.