NEW DELHI: LPG production, CNG, and piped cooking gas will take precedence over all other sectors using natural gas as the government rejigged allocation to ensure uninterrupted supply for households and transport sectors.
As the widening West Asia conflict disrupted 30 per cent of India's gas supply, the oil ministry in a gazette notification ordered available gas to be diverted from non-priority sectors to key users.
India meets half of its 191 million standard cubic metres per day (mmscmd) of gas consumption through imports. With the stalling of tanker movement through the Strait of Hormuz, about 60 mmscmd gas from the Middle East has been disrupted.
The remaining liquefied natural gas (LNG) has been reprioritised to meet 100 per cent of demand of LPG production, CNG, and piped cooking gas (PNG), 80 per cent of commercial users of the fuel and 70 per cent of fertiliser unit needs.
"We are monitoring the situation on a minute-to-minute basis and are alive to the evolving needs. We have just now reprioritised gas allocation to help meet the full demand of key sectors," a top ministry official said.
The re-allocation has been done to primarily augment LPG supplies that had been strained after the war in the Middle East disrupted half of the cooking gas supplies.
Liquefied petroleum gas, or LPG, is primarily produced from the processing of natural gas and is also a byproduct of crude oil refining. It is made by separating and purifying propane and butane gases, which are then pressurised into a liquid state for easy transport and storage in steel cylinders typically seen in homes and restaurants for cooking.
According to the gazette notification issued late on Monday, the latest order will override all outstanding contracts and other commercial arrangements for sale of LNG.
The freed gas will be allocated according to a priority list based on actual average usage over the past six months, the notification said.
With LPG production from traditional stream at saturation levels, the government has also previously ordered refineries to maximise output by diverting streams from petrochemicals.
"There has been a 10 per cent increase in production following these measures," the official said without giving more details.
He said original contracts will be restored once normalcy returns.
"We hope that happens soon," he said. "In the meanwhile we have been out in the market sourcing as much supplies as we can. We have had some success and will continue to tap all available opportunities."
Until now, compressed natural gas (CNG) and piped cooking gas were the two priority sectors to receive domestic natural gas as their raw material. Under the revised allocation, requirements of LPG, CNG, and piped gas manufacturers will be fully met first before natural gas is supplied to other sectors.
The supply of natural gas to domestic piped natural gas grid, CNG for transport, and LPG production shall be treated as priority allocation. They would be supplied 100 per cent of their average past six months' gas consumption, the notification said.
Behind these is the fertiliser sector at second place, with at least 70 per cent of its past six months demand being met.
At No. 3, gas supply to tea industries, manufacturing and other industrial consumers will be maintained at 80 per cent of their past six-month average gas consumption, subject to operational availability, the notification said.
All city gas distribution (CGD) entities supplying gas to industrial and commercial consumers have been placed at No. 4 on the priority list. They must ensure their customers receive 80 per cent of their past six months' average gas consumption subject to operational availability.
Domestic gas production, which meets about half the country's consumption of 191 million standard cubic metres per day, will be diverted to the priority sectors by curtailing supplies to petrochemical plants, power units and high-priced gas consumers.
Following US-Israeli strikes inside Iran and Tehran's sweeping retaliation across the region, maritime traffic through the Strait of Hormuz has sharply declined, insurance premiums have surged, and energy markets have responded with immediate volatility. Roughly one-fifth of the world's seaborne oil and nearly a third of global LNG shipments pass through this narrow channel linking the Gulf to global markets.
The artery is the conduit for supply of most of India's import of gas, in the form of LNG, as well as LPG. With tanker movement being stalled, the government has reworked domestically available gas to keep priority segments such as cooking needs of households and vehicular transport going.
Natural gas pumped out of ground or below sea bed is used to generate electricity, produce fertiliser, and is turned into CNG or LPG and piped to households kitchens for cooking.
"The Central Government has assessed that the ongoing conflict in the Middle East has resulted in the disruption of liquefied natural gas (LNG) shipments through the Strait of Hormuz and suppliers have invoked force majeure clause," the notification said, adding that the supply cuts would entail diversion of natural gas to the priority sectors.
The allocation rejig has been done to maintain supplies and secure equitable distribution and availability of natural gas for priority sector.
Pipeline compressor fuel and other essential pipeline operational requirements, too, have been put in this priority as without gas the pipelines cannot function.
Oil refining companies shall absorb the impact of LNG supply disruption to the extent feasible by reducing gas allocation to refineries to approximately 65 per cent of the past six month gas consumption, it said.
State-owned gas utility GAIL has been tasked to manage the supplies of natural gas to implement priority order.