India's Gas Authority Considers Reducing Quotas Amid Escalating Middle East Tensions

GAIL India Warns of Potential Gas Supply Cuts to Downstream Customers

State-owned GAIL India, which accounts for approximately 70% of India's gas transmission market, has informed several companies that their gas allotment quotas may be reduced due to Force Majeure in the Gulf, disrupting oil and gas supplies globally.

The public sector undertaking (PSU) has prioritized retail needs, including cooking gas and Compressed Natural Gas (CNG) for vehicles, amidst the crisis. This decision is significant as various industries, such as fertilizer, petrochemicals, textiles, and food processing, rely heavily on liquefied gas for production.

GAIL India is currently assessing the situation and potential supply curtailment for its downstream customers. However, the company has stated that LNG supplies from other sources/suppliers remain unaffected. The potential impact of the ongoing Force Majeure situation cannot be quantified at this stage.

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Industry executives have expressed concerns about the potential cuts, with one senior corporate executive stating that if the cuts are below 15% of the normal quota, industrial units may not face significant issues. However, if the cuts exceed this threshold, companies may be put in a tight spot.

India's LNG imports have been blocked due to the escalating conflict in West Asia, with recent attacks on Qatari facilities and the closure of the Strait of Hormuz affecting the country's gas supply. The Indian government has hinted at re-prioritizing gas allocation to different sectors in case gas supply tightens.

Petronet LNG, India's largest LNG terminal operator, has invoked force majeure for its affected tankers, and GAIL India has reported that the allocation of LNG quantities to the company has been reduced to zero with effect from March 4, 2026 due to supply restrictions imposed by Petronet LNG.

The Indian government is concerned about the shutdown of Qatar's LNG production facility, which accounts for 25% of global LNG supply.

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