India’s LNG & LPG shortage to be short-lived as new supply routes, domestic production kick in: Govt sources

India’s current natural gas supply crunch is likely to be short-lived as the prevailing higher prices right now make imports from distant sources such as Norway and the U.S. economically viable, according to government sources. However, such shipments typically take longer to arrive, meaning the country could face a shortage in the interim, they said.  

Requesting anonymity, an official said India’s LPG output has increased by 10% after the government decided to prioritise supplies to households over industry users. On March 5, the Ministry of Petroleum and Natural Gas (MoPNG) asked all oil refining companies to maximise production, directing that all propane and butane produced, recovered or otherwise available be utilised for LPG output. 

Difficult to pivot quickly

“On LNG, it is very difficult to make changes quickly,” the official said. “Apart from Qatar, our other options are Norwegian or American gas, and that takes a long time to reach India.” 

“We were getting Qatar gas at $6-8 per MMBtu [Metric Million British Thermal Unit], and now the price is $15 per MMBtu,” he further explained. “But, the economics of it is that, once the price crosses even $10 per MMBtu, then gas from Norway and the U.S. becomes viable even despite the long distance.”

Another government official said that both LPG and LNG supplies have been diversified, with cargoes “already arriving”. “Some geographies are distant and therefore take time, but supplies are coming,” the official stated. 

Shipping industry estimates suggest it takes about two months for vessels to travel to the U.S. or Norway and return to India with gas cargo. 

“There will, of course, be a lead time between placing orders and receiving deliveries from those countries,” the official said. “Gas will not be a long-term problem, but there will be some short-term pain.” 

Priority for households 

Another official, who also did not wish to be identified, said the government’s utmost priority is to ensure an uninterrupted LPG supply to domestic households without “jeopardising commercial entities”.

To allay concerns among restaurateurs about potential shortage of commercial LPG cylinders, the government on Monday constituted a committee comprising three executive directors of oil marketing companies (OMCs) to “review the representations for LPG supply and try to provide some volumes to them.” 

The official stated, “We [the committee] are already in touch with the restaurateurs. All genuine requirements will be addressed and relief provided to the extent possible.”

Asked whether the committee had been accorded a timeline, the official said, “We will have to evaluate on a case-to-case basis, and will act accordingly.”