Gas Companies Raise Prices, Refineries Pause Production: How the Oil Shortage Is Hitting India
New Delhi: As United States and Israel's attacks on Iran continue in West Asia, India's liquefied petroleum gas and liquefied natural gas supply is strained. Iran has, in retaliation, choked the crucial Strait of Hormuz.
West Asia has, in various reports, been described as the source of nearly two-thirds of India's liquefied natural gas and close to half of its crude.
Economic Times has reported that Gujarat Gas has invoked a force majeure clause on its gas supply agreements with industrial users. This will lead to it restricting the daily contracted quantity from March 6.
As analysts had predicted, availability of regasified liquefied natural gas or R-LNG has been severely affected due to the impact of the US-Israel attack on Iran.
The ET report quotes a company exchange filing on March 4. Acts of war are not covered under the insurance it has taken, Gujarat Gas said, according to the report.
Adani Total Gas – a joint venture of Adani Group and French oil major TotalEnergies – meanwhile, has sharply raised prices for supplies to industrial clients citing lower availability of gas due to the situation in West Asia, according to a customer notice reported on by Reuters.
"Due to recent geo‑political developments impacting LNG supply routes, ATGL has received upstream gas curtailment, leading to operational constraints," the company is quoted as having said.
Prices have gone up from Rs 40 per standard cubic metre to around Rs 119 per standard cubic metre – almost triple.
Another report by Reuters notes on the basis of three sources that the Mangalore Refinery and Petrochemicals has closed down a crude unit and some secondary units due to oil shortage.
The refinery produces 300,000 barrels a day.
Last evening, the state-run refiner shut the 100,000-barrel-per-day crude unit and secondary units, including a hydrocracker, the report said.
A Bloomberg report notes that the LPG burn too would be significant, highlighting the fact that Indian refiners met government officials after the weekend attacks to discuss energy contingency plans.
As The Wire has reported before, India is the world’s second-largest LPG buyer and gets more than 90% of its supply from West Asia, as a note by the data intelligence firm Kpler says.
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