India’s LNG and LPG Shortage May Ease as New Supply Routes Open

India’s energy system is facing short-term stress as global geopolitical tensions disrupt supplies of liquefied natural gas (LNG) and liquefied petroleum gas (LPG). However, industry experts believe the situation may stabilize sooner than expected.

The recent supply disruption highlights India’s dependence on imported energy, particularly from the Middle East. Yet, new supply routes, increased domestic production, and government intervention are expected to ease the pressure in the coming months.

Understanding the scale of the disruption and the response from policymakers is essential to assess how India’s energy security may evolve.

Understanding the India LNG LPG Shortage

The current India LNG LPG shortage is primarily linked to geopolitical tensions in West Asia. The conflict has disrupted shipping routes and slowed fuel shipments passing through the Strait of Hormuz, one of the world’s most critical energy transit corridors.

India is particularly exposed to such disruptions. The country is the world’s second-largest importer of LPG and consumed 33.15 million metric tons of LPG last year. About two-thirds of this demand is met through imports, with 85–90% sourced from the Middle East.

The immediate effect has been tightening supply conditions in several sectors:

• Commercial LPG supplies have slowed in some cities
• Restaurants and hospitality businesses face shortages
• Prices for cylinders have increased

The price of a 14.2-kg LPG cylinder in Delhi rose by about 7% to ₹913, reflecting higher global costs and supply disruptions.

Why India Depends Heavily on Imported LPG and LNG

India’s demand for cleaner cooking fuels has expanded rapidly over the past decade. Government programs have increased LPG access across the country, pushing household adoption close to universal coverage.

Despite this progress, domestic supply remains limited.

• Only around 40% of India’s LPG demand is produced domestically.
• Nearly 60% is fulfilled through imports.

LNG plays an equally important role in India’s energy mix. Natural gas is widely used in:

• Fertilizer production
• Power generation
• City gas distribution networks
• Industrial processes

About half of India’s natural gas demand is met through LNG imports, with Qatar among the largest suppliers.

This structural dependence makes India vulnerable to geopolitical shocks affecting global energy supply chains.

Immediate Government Measures to Stabilize Supply

The Indian government has moved quickly to contain the disruption.

Authorities invoked emergency measures and directed refiners to maximize LPG production. This involves diverting propane and butane — key LPG components — from petrochemical uses toward cooking gas supply.

Several additional actions have also been taken:

• Refineries asked to increase LPG output
• Domestic gas redirected to priority sectors
• Supply prioritised for households, CNG transport, and cooking gas networks

Energy companies are already responding. For example, Reliance Industries has increased LPG production and redirected domestic gas supplies toward priority sectors.

These steps aim to prevent shortages for households, which remain the government’s primary concern.

Impact on Businesses and Commercial Users

While households remain protected, commercial sectors are experiencing immediate pressure.

Restaurants and hotels rely heavily on commercial LPG cylinders for daily operations. Some operators have warned of possible closures if supply disruptions continue.

Reports indicate that many restaurants have only a few days of LPG inventory remaining. Businesses are exploring alternatives such as electric cooking equipment or other fuels to maintain operations.

Commercial cylinder prices have also risen significantly, increasing operating costs for the hospitality sector.

The government has formed a committee to examine industry concerns and evaluate possible allocation adjustments.

How New Supply Routes and Production Could Resolve the Crisis

Despite current disruptions, industry analysts expect the shortage to remain temporary.

Several factors could stabilize the market:

1. Diversified Global Supply

India is exploring LPG imports from alternative producers, including the United States and other global suppliers.

2. Increased Domestic Refinery Output

Indian refiners have already begun boosting LPG production to offset the decline in imports.

3. Reallocation of Domestic Natural Gas

Natural gas is being redirected toward priority energy needs, including cooking gas production and city gas networks.

4. Strategic Energy Adjustments

Industrial consumers can temporarily shift to alternative fuels such as naphtha or furnace oil when gas supplies tighten.

These adjustments collectively reduce the immediate risk of a prolonged energy shortage.

Strategic Implications for India’s Energy Security

The current supply disruption highlights deeper structural challenges in India’s energy strategy.

First, heavy reliance on Middle Eastern imports exposes the country to geopolitical risk. A single chokepoint such as the Strait of Hormuz can disrupt significant portions of the supply chain.

Second, India lacks extensive gas storage infrastructure. Unlike Europe, which maintains underground storage reserves, India relies heavily on just-in-time LNG imports.

Third, growing energy demand from households, transportation, and industry is increasing pressure on supply systems.

For policymakers, the crisis reinforces the importance of diversifying energy sources and strengthening domestic production capacity.