In crunch, government says domestic PNG, CNG, LPG production priority

NEW DELHI: Facing a severe LNG (liquefied natural gas) crunch, govt on Monday invoked the Essential Commodities Act, 1955, to reallocate gas supply and slashed allocation for fertiliser and other industries, while seeking to ensure full availability for priority sectors such as domestic piped natural gas (PNG) for kitchens, compressed natural gas (CNG) for transport and LPG production.

The decision came days after petroleum ministry insisted that supplies were comfortable, and it was seeking more flows from Canada and Australia amid outages in Qatar, the top source of LNG for India.





Hours after the notification, PM Modi met petroleum minister Hardeep Puri and external affairs minister S Jaishankar for an assessment of the situation and its impact on energy flows.

During a Cabinet meeting earlier in the day, Modi asked his colleagues to take stock of the situation in their respective ministries and interact with all stakeholders to ensure people do not suffer because of the conflict in West Asia.

While fertiliser units, many of which are advancing shutdown, will be supplied 70% of their average consumption in the last six months, availability for industrial units will be 80% of the average for the last six months.

Govt in talks with several countries to import LNG through other routes

The notification added that the gas required to meet the needs of the priority sectors would be met through full or partial curtailment of gas supplied to petrochemical facilities and power plants, and by reducing gas allocation to refineries to 65% of their requirement.

India imports nearly half of its natural gas requirements of around 190 million standard cubic metres per day (mscmd). More than 50% of the imported LNG comes from Qatar and the UAE through the Strait of Hormuz, which has effectively remained closed to vessel movement for nearly 10 days now. Officials said govt was in talks with several countries to import LNG through other routes, while refiners have made spot purchases to meet their requirements.

Ministries such as shipping and road transport have held stakeholder consultations and are holding regular meetings to address concerns. Officials said inter-ministerial consultations were also taking place to ensure prices of essential commodities remained under control, considering that govt has enough buffer stock of rice, pulses and other items.

The fact that availability of PNG and CNG impacts millions of people in India has forced govt to invoke the Essential Commodities Act and categorise them as priority sectors along with LPG production to ensure there is no shortage of the fuel.

Though the fuel is also used as feedstock for fertilisers, petrochemicals, tea industries, manufacturing and power generation, among others, the gazette notification considered it necessary to regulate production, sector-wise allocation and diversion of LNG supplies. The notification said this was done to ensure equitable distribution and continued availability of natural gas for priority sectors.

GAIL (India), in coordination with Petroleum Planning and Analysis Cell, will manage the supplies of natural gas to implement the directives.