As Middle East Burns, Could India Face A Cooking Gas Crisis?

New Delhi: The raging war in the Middle East has put India at a tight spot. In a few weeks from now, as the offensive continues in West Asia, India may be staring at a chronic shortage of cooking gas since supply lines may be choked in the Persian Gulf. The ongoing crisis has already driven up inflation in India.

While crude oil and liquefied natural gas has attracted much of the limelight in the recent conflict as the Strait of Hormuz remains choked, India may first face the heat of LPG shortage, as millions of middle-class homes are dependent on this niche fuel.

Some experts familiar with the matter have suggested that the crisis can only be averted if  the cargo stuck at the Gulf, which is due to arrive in March, gets moving within days. Notably, India is the world's second-largest LPG importer and more than 90% of its supply is imported from the Middle East.

Though India has considerably reduced its dependence on the Gulf for oil supplies in recent days, it still depends on the Middle East for much of its oil imports. The Middle East remains the source of nearly two-thirds of India's liquefied natural gas and around half of its crude. Even if India were to make last-minute purchases from the US, those would not reach its shores before April.

According to a government official, India's LPG stocks can last up to approximately 30 days. Recently Indian refiners held a meeting with government officials to discuss energy contingency plans.

India's LNG storage is limited and freight rates have skyrocketed, which is in turn hurting industrial consumers.

Petronet LNG, India's largest importer of super-cooled fuel, has declared force majeure on its Qatari supplies, which is in turn leading to 50% cut in flows to clients.

India is stashed on eight weeks of commercial and strategic stockpiles of crude, and so it may not be facing oil crunch immediately. However, if the situation worsens, it may need to ration its supplies.

Some sources have hinted that India may tap into Russian cargoes, which is currently in the Indian waters, also reportedly suggested by officials from the US. Refiners may also be forced to halt its fuel exports, it the situation degrades further. 

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