Govt withdraws emergency gas supply curbs as LNG shipments via Strait of Hormuz resume

India Lifts Emergency Gas Restrictions as Hormuz Trade Resumes

Theindiapostdaily.com – The Indian government has eased most of the emergency gas supply regulations that were enforced during the West Asia conflict, following the resumption of liquefied natural gas (LNG) cargo flows through the Strait of Hormuz. A notice dated 4 July revealed revisions to the Natural Gas (Supply Regulation) Order, 2026, which previously allowed for prioritizing domestic production and imported LNG to key sectors. The adjustments removed critical provisions that had enabled such control, signaling a shift in policy.

Stabilization After Ceasefire and Diplomatic Talks

According to the ministry, the crisis has subsided due to the Iran-US ceasefire, sustained diplomatic efforts, and the restoration of maritime routes through the Strait of Hormuz—a vital corridor for Gulf energy exports. “The Middle East conflict, which disrupted LNG shipments through the Strait of Hormuz, has been mitigated by a ceasefire, with sea traffic gradually resuming as negotiations progress,” the notice stated.

Triggering the Emergency Measures

The February 28 US and Israeli strikes on Iran, along with Tehran’s retaliatory actions, effectively closed the Strait of Hormuz, threatening India’s energy supply chain. This prompted the government to implement three emergency measures, including restrictions on gas distribution to ensure critical sectors remained operational. Two of these measures—increasing LPG production and limiting diesel sales—were already lifted after fuel supplies normalized.

India’s Dependence on West Asia

India, the world’s third-largest oil importer, relies on external sources for 88% of its crude oil needs and nearly half its natural gas consumption. Approximately 40-45% of oil imports and 65% of LNG supplies originate from West Asia, underscoring the nation’s vulnerability to disruptions in this strategic waterway. The government’s intervention in March was aimed at safeguarding energy availability amid the crisis.

Why LNG Was More at Risk

Unlike crude oil, which India could diversify by sourcing from alternative regions, LNG imports remained highly exposed. Around 65% of India’s LNG supplies pass through the Strait of Hormuz, primarily from Qatar. During the disruption, suppliers invoked force majeure, leading the government to impose emergency rules to prioritize gas distribution.

Emergency Allocation Framework

The March 2026 order outlined specific guidelines for allocating domestic gas, LNG, and regasified LNG to maintain supply for priority users. Under this framework, PNG households, CNG for transport, and LPG production received 100% of their average consumption. Fertilizer plants got 70%, while industrial consumers on the national grid or city gas networks were guaranteed 80%, depending on availability.

Impact on Refineries and Power Plants

To meet these targets, gas supplies to petrochemical units and power plants were reduced, while refiners were directed to cut their usage to 65% of average levels. The order also assigned GAIL the responsibility of consolidating and redistributing gas supplies to support critical demand across the country.