India invokes Essential Commodities Act and reprioritizes gas allocation amid Middle East-linked supply disruptions
The Facts
- The Indian government invoked the Essential Commodities Act, 1955 to regulate the availability, supply and distribution of petroleum-related fuels and/or natural gas amid concerns about disruptions linked to the Middle East conflict.
- The Ministry of Petroleum and Natural Gas issued an order/notification to regulate natural gas supply and prioritize certain sectors following disruptions to LNG shipments routed through the Strait of Hormuz.
- Priority allocation under the new framework includes domestic piped natural gas (PNG) for households, compressed natural gas (CNG) for transport, and LPG production, with these sectors to receive up to 100% of their average consumption over the past six months, subject to operational availability.
- Fertiliser plants are placed in a lower priority tier and are to receive around 70% of their average gas consumption over the past six months, subject to availability and/or specified conditions.
- Refineries and petrochemical units have been directed to maximize LPG production and divert key hydrocarbon streams into the LPG pool to support cooking gas supply.
- Restaurant/hotel industry groups in multiple Indian cities reported shortages of commercial LPG cylinders and warned of potential closures or shutdowns if supplies do not improve.
- State-run oil marketing companies (including Indian Oil, BPCL and HPCL) said they are taking steps to enhance LPG production and prioritize supply for domestic consumers, with non-domestic requests to be reviewed/prioritized.
Context
What changes did India make to natural gas allocation under the new order?
The government set a priority order for domestically produced natural gas, giving top priority to domestic PNG for households, CNG for transport, LPG production (including shrinkage requirements), and essential pipeline operations—targeting up to 100% of average consumption over the past six months (subject to availability). Fertiliser plants are placed in a lower tier at about 70%, while other industrial/commercial users face tighter allocations. NDTV,News18,mint,Financial Express
Why did the government say it was tightening controls on gas supplies?
Officials cited disruptions to LNG shipments linked to the Middle East conflict, including impacts on cargoes routed through the Strait of Hormuz, and said regulation was needed to ensure equitable distribution and continued availability for priority sectors. NDTV,Daily Mail,Hindu,Anadolu Ajansı
What steps are being taken to address cooking gas (LPG) availability concerns?
The government directed refineries and petrochemical units to maximize LPG output and divert key hydrocarbon streams to the LPG pool, while major oil marketing companies said they are boosting LPG production and prioritizing domestic consumers, with non-domestic demand reviewed based on necessity and availability. MoneyControl,News18,News18,MoneyControl
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