Supply Chain Disrupted: Fertiliser and City Gas Companies Seek Alternatives Amid LNG Shortages Triggered by Iran Conflict

LNG Supply Disruptions to Impact Indian Industries

Key Takeaways:

• India's liquefied natural gas (LNG) supplies are running low due to the blockade of the Strait of Hormuz and Qatar's suspension of LNG shipments on March 2.
• City gas distributors, fertiliser manufacturers, and LNG truck operators are bracing for potential margin pressures due to elevated LNG prices.
• Industry-wide impact is expected, with 4 weeks of supply remaining for fertiliser companies.

Supply Chain Disruptions:

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• The share of US LNG in India's supplies has doubled to 14% in 9M FY26 from FY20, but the ramp-up of gas imports from the US and other suppliers will take time.
• Logistics companies, including GreenLine Mobility and Allcargo Logistics, are scrambling to secure alternative suppliers due to the shortage.
• Petronet LNG, with over 70% exposure to LNG supplies, has declared force majeure, notifying its inability to meet supply commitments.

Industry-Wide Impact:

• Gujarat Gas faces dual risks to both margins and volumes due to its high dependence on LNG supplies, with nearly 48% routed through Hormuz.
• In contrast, GAIL appears relatively better off due to its diversified sourcing, with only 16% dependence on Hormuz.
• City gas distributors such as Mahanagar Gas and Indraprastha Gas remain relatively insulated from supply disruptions.

Impact on Energy Transition:

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• The industry's dependence on imported LNG and evolving refuelling infrastructure expose the sector to supply and pricing volatility.
• The energy transition in India aims to increase the share of natural gas in the energy mix to 15% by 2030, with LNG playing a critical role.