Govt withdraws emergency gas supply curbs as Hormuz LNG shipments resume

The government has withdrawn most emergency curbs on natural gas supplies after liquefied natural gas (LNG) shipments through the Strait of Hormuz resumed following a ceasefire in the West Asia conflict. In a notification issued on Saturday, the Ministry of Petroleum and Natural Gas amended the Natural Gas (Supply Regulation) Order, 2026, removing key emergency provisions that had allowed the government to prioritise the allocation of domestically produced natural gas and imported LNG. The emergency order, issued on March 9 under the Essential Commodities Act, was introduced after disruptions to LNG shipments through the Strait of Hormuz prompted suppliers to invoke force majeure and divert cargoes, raising concerns over India's energy security. The ministry said the situation has since stabilised with a ceasefire in place, negotiations underway and maritime traffic through the Strait of Hormuz resuming. The withdrawal marks the end of one of three emergency measures introduced after energy supplies from the Gulf came under threat following US and Israeli strikes on Iran on February 28 and Tehran's retaliatory attacks. The government had already rolled back directives requiring refiners to maximise LPG production by diverting petrochemical feedstock and restrictions on diesel sales to bulk consumers as supply conditions improved. India imports nearly 88 per cent of its crude oil requirement and around half of its natural gas demand. Around 40-45 per cent of the country's crude imports and nearly 65 per cent of LNG supplies originate from West Asia, making the Strait of Hormuz a critical energy corridor. While India diversified crude oil sourcing during the disruption, LNG imports remained particularly vulnerable as most cargoes from Qatar transit through the Strait of Hormuz. The March emergency order empowered the government to reallocate domestic gas, LNG and regasified LNG across sectors to ensure uninterrupted supplies to priority consumers after force majeure declarations by suppliers. Under the emergency framework, piped natural gas (PNG) households, compressed natural gas (CNG) for transport, LPG production and pipeline operations were assured 100 per cent of their average gas consumption over the previous six months. Fertiliser plants were guaranteed 70 per cent of their average requirement, while industrial consumers connected to the national gas grid and city gas distribution networks were assured up to 80 per cent of average consumption, subject to operational availability. To meet these commitments, the government had authorised curtailment of gas supplies to petrochemical plants and power stations, while directing oil refiners to reduce gas consumption to around 65 per cent of their average usage wherever operationally feasible. The order also tasked state-run GAIL, in coordination with the Petroleum Planning and Analysis Cell (PPAC), with pooling and redistributing gas supplies, notifying pooled prices for diverted gas and overseeing revised allocation schedules. Gas producers, LNG importers, marketers, pipeline operators and city gas distributors were required to comply with the revised supply schedules, with the emergency provisions overriding existing commercial agreements. Announcing the rollback, the ministry said the exceptional measures were no longer necessary as supply conditions had normalised. "The ongoing conflict in the Middle East that had resulted in the disruption of liquefied natural gas shipments through the Strait of Hormuz has been subject to a ceasefire, and negotiations are ongoing, as part of which, sea traffic through the Strait of Hormuz has been permitted to be resumed," the notification said. Following this, the government is "omitting" parts of the March 9 emergency order that prioritised all available gas, it added.