Disruption at Strait of Hormuz Threatens to Double India's Energy Delivery Times

India's Energy Imports at Risk: Delivery Times Could Double Amid Geopolitical Tensions

Key Findings:

• India relies heavily on West Asian suppliers for its energy needs, with 59.5% of its LNG imports coming from Middle Eastern countries.
• Replacing supplies from the Middle East with cargoes from other regions could nearly double delivery times, raising costs and tightening energy markets.
• 4-6 days is the typical delivery time for LNG shipments from the UAE's Das Island to India's west coast terminals, while east coast terminals receive cargoes in 11-12 days.

Impact of Alternative Supplies:

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• LNG shipments from Western Australia take 9-12 days to reach India, while those from Australia's east coast projects can take 15-17 days.
• Cargoes from Nigeria typically take 18-24 days to reach India, with an average sailing time of 19-20 days via the Cape of Good Hope.
• Shipments from the US would be the slowest, requiring 30-35 days to reach India via the Cape of Good Hope.

Freight Costs and Premiums:

• Longer voyages could increase freight costs and push Asian buyers to pay higher premiums to attract cargoes away from Europe.
• Asian buyers may need to pay a premium over European prices to secure supplies, particularly from alternative sources.

India's Energy Reserves and Diversification:

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• India imported $15 billion worth of LNG in 2024, placing it among the world's major buyers.
• The top five suppliers account for around 83.5% of India's LNG imports, underscoring limited diversification in sourcing.
• India maintains over three weeks of energy reserves, which could cushion short disruptions.