Govt invokes ESMA to prioritise LPG production for domestic use as West Asia conflict escalates

THe regime on tues moved to ration out cancel gaseous state supplies, prioritising households receiving piped gas, vehicles running on compressed natural gas (CNG), and units producing cooking gas (LPG), as the conflict in West Asia disrupts liquefied natural gas (LNG) shipments through the Strait of Hormuz.“The ongoing conflict in the Middle East has resulted in the disruption of liquefied natural gas shipments through the Strait of Hormuz,” the ministry of petroleum and natural gas said in an order, adding that the new rules would “ensure equitable distribution and continued availability for priority sectors”.The ministry on Monday night notified the Natural Gas (Supply Regulation) Order, 2026, invoking the Essential Commodities Act (ESMA) of 1955 — giving the directive overriding authority over all existing gas sale agreements and commercial arrangements.The order establishes a four-tier priority system for gas allocation, with supplies to lower-priority sectors — including petrochemical plants, power stations, and oil refineries — curtailed to meet essential demand. According to people aware of the matter, Prime Minister Narendra Modi met petroleum minister Hardeep Singh Puri and external affairs minister S Jaishankar ahead of the Cabinet and Cabinet Committee on Economic Affairs (CCEA) meetings on Tuesday. Members of the Cabinet were briefed on the supply situation during their meeting and told there was no reason for panic, a person aware of the matter said.The Cabinet was informed that issues with LPG supplies were expected to be resolved within a day or two and that instructions were being issued, this person said, adding that Union home minister Amit Shah and finance minister Nirmala Sitharaman have been in touch on the matter.But even as the government moved to protect household supplies, the impact of curtailed imports was already rippling through commercial consumers. Restaurants across several cities reported running out of cooking gas, industry bodies warned of mass closures affecting hundreds of thousands of establishments, and at least one state chief minister wrote to the Centre seeking urgent intervention.India’s total gas consumption in 2024-25 was about 71.3 billion cubic metres (BCM) with 50.1% import dependency, according to the Petroleum Planning and Analysis Cell (PPAC). The West Asia conflict has disrupted about one-third of total LNG imports, according to experts. The balance of India’s LNG imports comes from the US, Russia, and Australia.India imports natural gas in liquefied form as LNG, which once re-gasified feeds the pipeline network supplying PNG to households and CNG to vehicles. LPG — the cooking gas used by homes and commercial establishments — is a separate product, but its domestic production depends in part on natural gas processing, meaning disruptions to LNG imports squeeze both supply chains. In a post on X on Tuesday, Puri said, “We have taken steps to ensure that 100% supply of CNG & PNG to domestic consumers is ensured and other industries continue to get 70-80% of their supplies, despite the war situation. We are committed to ensure uninterrupted supply of affordable energy to our domestic consumers. There is no shortage for domestic consumers and no reason to panic.”Under the first tier, gas requirements for domestic PNG, CNG for transport, production of LPG, pipeline compressor fuel, and other essential pipeline operations will be met in full, based on average consumption over the past six months, the order said.Also Read | 'Catastrophic closure': Restaurants in fear, govt prioritises home LPG supply as India faces West Asia war ripplesFertiliser plants are placed in the second tier, with allocations maintained at 70% of their six-month average consumption. Natural gas is both fuel and feedstock for fertiliser production, and the order specifies that allocated gas “shall not use the gas supply for any other purpose” except producing fertilisers. Units must furnish a certificate to this effect to the PPAC.The third tier covers other manufacturing and industrial consumers, including the tea industry, supplied through the national gas grid, maintained at 80% of their average consumption. Industrial and commercial consumers supplied through city gas distribution (CGD) networks form the fourth tier, also at 80%.To meet priority-sector demand, gas supplies will be fully or partially curtailed from petrochemical facilities — including ONGC Petro Additions Limited, the GAIL Pata Petrochemical Complex, and Reliance Industries’ O2C (oil to chemicals) business— as well as power plants. Oil refineries must absorb reductions to approximately 65% of their past six-month consumption.The Gas Authority of India Limited (GAIL), in coordination with PPAC, will manage supply and diversion. A pooled price for diverted gas will be notified by PPAC; priority entities must accept this price, cannot initiate litigation over it, and are barred from reselling diverted gas.India’s biggest private refiner Reliance Industries Ltd (RIL) on Tuesday said it will maximise LPG production from its refining and petrochemicals complexes at Jamnagar, with teams working around the clock to optimise refinery operations and enhance LPG output so that supplies to the domestic market remain stable and reliable.“At a time when global energy markets are experiencing volatility, ensuring uninterrupted access to essential fuels for Indian households remains a national priority. Reliance Industries is taking proactive steps and in line with the Government guidelines,” it said in a statement.It also said that natural gas produced from RIL-operated KG-D6 Basin will be diverted to support supply to priority sectors, in line with national energy priorities and government guidelines.Restaurants across several cities have begun scaling back operations or shutting down as commercial LPG supplies dry up, with some establishments reporting they received barely 20% of their usual cylinder deliveries on March 9 before supplies stopped entirely.Also Read | Trump warns Iran of fresh consequences over mines in Strait of Hormuz“Supply problems started on March 9. Most hotels received barely about 20% of their usual cylinder deliveries, and since then the supply has stopped completely. Distributors themselves are not receiving cylinders, so restaurants have effectively been cut off,” said Arun Adiga, managing partner of Vidyarthi Bhavan, the nearly eight-decade-old storied Bengaluru restaurant.Narendra Somani, president of the Federation of All India Caterers and chairman of the Hotel and Restaurant Association of Gujarat, said 20% of eateries in Gujarat could close if the suspension continues. “In areas like Manek Chowk and Law Garden where many of the roadside stalls run on LPG cylinders, they are likely to shut down from today as they will run out of gas supplies,” he said.The National Restaurant Association of India has written to the petroleum minister seeking continued supply of commercial LPG cylinders, warning that disruption would affect a sector representing more than 500,000 restaurants and providing employment to over eight million people.Karnataka chief minister Siddaramaiah wrote to Puri on Tuesday urging intervention, saying, “Several hotels and restaurant associations in the city have reported that they are unable to procure commercial LPG cylinders, and many establishments are expressing concern that they may have to temporarily shut operations if supplies are not restored soon.”A communication issued by the All India LPG Distributors Federation on March 9 said supply of commercial LPG cylinders to non-essential establishments, including hotels and restaurants, had been temporarily suspended due to the geopolitical situation.State-run oil marketing companies have prioritised domestic LPG supply to households and introduced a 25-day minimum interval between subsidised refills — extended from 21 days — to curb hoarding and black marketing, Reuters reported. The government also raised cooking gas prices on Saturday for the first time in a year.(With inputs from HTC in Bengaluru and Ahmedabad)