Iran-Backed Strike on QatarEnergy LNG Facility Threatens to Exacerbate India's Gas Shortages

India's Gas Crisis Worsens after Iran's Attack on QatarEnergy Facility

Key Developments:

• Iran's attack on QatarEnergy's main gas facility has caused extensive damage, disrupting Qatar's natural gas supply to India.
• Qatar accounts for 45% of India's natural gas requirements, with 60 MMSCMD of the imported gas coming from Qatar.

India's Natural Gas Requirements:

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• India needs 195 MMSCMD of natural gas every day, with half being imported and half produced domestically.
• Of the imported gas, 60 MMSCMD comes from Qatar.

Impact on LNG Supplies:

• The Ras Laffan facility, which was already facing disruption due to a force majeure announced by QatarEnergy, could take months to resume operations and bring full capacity back online.
• Qatar accounts for 19% of the global LNG supply, and it could take months to bring the full capacity back online.

Diversification of LNG Imports:

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• India could diversify its LNG imports from other countries, including the US, Russia, Papua New Guinea, and Australia.
• However, the pricing of gas from these areas will have to be monitored, given India's price-sensitive market.

Market Impact:

• Asian LNG futures have surged by 88% while European gas contracts have already risen 70% since the outbreak of war, according to data from Bloomberg.
• The attack has resulted in extensive damage to the Ras Laffan facility, which could lead to a long-term impact on India's gas supply.

Government Response:

• Indian companies are actively scouting for LNG cargoes from other suppliers, including the US, Russia, Papua New Guinea, and Australia.
• The government may face a higher subsidy burden due to the increased cost of LNG imports.