Amid the ongoing West Asia conflict and the heavy disruption in vessel transit through the critical chokepoint of the Strait of Hormuz, India’s largest importer of liquefied natural gas (LNG) Petronet LNG has issued force majeure notices to its key supplier QatarEnergy, and its off-takers GAIL (India), Indian Oil Corporation, and Bharat Petroleum Corporation. Moreover, QatarEnergy has also issued a notice indicating a potential force majeure due to the conflict, which has forced the LNG producer to halt production. These force majeure notices are indicative of an LNG supply cut, and according to sources, gas supplies to some sectors in India have been reduced in the anticipation of tighter LNG deliveries to the country amid the West Asia crisis.
Shares of Petronet LNG tanked nearly 12% on Wednesday morning, before recovering slightly and ending the day’s trade down 9.3% at Rs 280.50 on the BSE. Shares of other oil and gas companies with exposure to LNG—like GAIL, Indian Oil, Bharat Petroleum, Mahanagar Gas, and Indraprastha Gas—fell notably. GAIL ended Wednesday’s trading session down 6.3% on the BSE, while Indian Oil fell 4.8%. Mahanagar Gas was down 8.9% and Indraprastha Gas shed 5.6%.
Force majeure is a clause in contracts that frees parties from liability or obligation when an extraordinary and unforeseeable event beyond their control occurs. Such events commonly include wars, strikes, riots, epidemics, and natural disasters. In this specific case, the force majeure notices indicate that Petronet LNG is unable to lift LNG cargoes from Qatar and supply the contracted quantities to its off-takers, and Qatar—India’s largest LNG supplier—is unable to fulfil its supply obligation.
India depends on LNG, or super-chilled gas, to meet roughly half of its natural gas needs, and over half of India’s LNG imports—from Qatar and the UAE—come through the Strait of Hormuz, the narrow waterway between Iran and Oman that connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. It is the most important oil and gas transit chokepoint globally and handles approximately one-fifth of global liquid petroleum consumption and LNG trade.
Petronet LNG has long-term contracts to buy 8.5 million tonnes per annum (mtpa) of Qatari LNG. It also buys additional LNG volumes from Qatar from the spot market. Other Indian oil and gas companies also buy LNG from the UAE. In all, India imports around 27 mtpa of LNG from various geographies.
With Iran warning vessels to not transit through the Strait of Hormuz, and even hitting a few vessels that were passing through the waterway, there is an effective halt in maritime traffic through the Strait with most trading houses, insurers, and vessels loath to get involved in the prevailing extremely high-risk environment. This has led to a jump in international prices of crude oil and LNG, prompting US President Donald Trump to announce that the US will step in to provide insurance, and military protection if necessary, to merchant vessels in the Gulf. Moreover, Qatar also halted LNG production after a couple of its facilities came under attack from Iran.
“…in light of the recent and ongoing war in the Middle East region involving Iran and Israel, vessels are presently unable to safely transit through the Strait of Hormuz (also referred to as the Gulf of Hormuz) to reach Ras Laffan, the loading port of QatarEnergy. Considering the prevailing security situation and the material risks posed to maritime navigation, the Company (Petronet LNG Limited) has issued a Force Majeure Notice to QatarEnergy in respect of its LNG tankers, namely Disha, Raahi, and Aseem. Further, QatarEnergy, being the Company’s seller, issued a notice indicating a potential event of Force Majeure due to the hostilities prevailing in the region,” Petronet LNG informed the stock exchanges.
“Consequently, the Company has issued corresponding Force Majeure notices to its off-takers, namely GAIL (India) Limited, Indian Oil Corporation Limited (IOCL), and Bharat Petroleum Corporation Limited (BPCL), under the relevant Gas Sale and Purchase Agreements on 3rd March 2026,” it added. According to Petronet LNG, acts of war are excluded under the business interruption insurance covers taken by Petronet LNG. The likely impact of the force majeure, which is currently an ongoing event, “cannot be estimated at this point of time”, the company said, adding that it is closely monitoring the developments.
While India is currently estimated to have crude oil and fuel stocks for at least six to eight weeks, the country’s cushion is thinner when it comes to LNG as additional LNG stockpiling is significantly more challenging than crude oil and petroleum fuels. On Tuesday, highly placed sources in the Ministry of Petroleum and Natural Gas (MoPNG) said that the government is closely monitoring the situation and doesn’t expect any notable LNG supply hit if Qatar’s LNG production pause is for a week or 10 days. If the closure lasts beyond that, additional domestic supply adjustments could be explored. Moreover, Indian oil and gas companies are actively scouting for additional LNG cargoes from other source markets.
Industry sources indicate that in view of the anticipated supply shortfall from Qatar, Indian gas marketers like GAIL have reduced supplies to industries and even the city gas distribution (CGD) sector by up to 40% in some cases. Further rationalisation of supplies to certain industries that can operate on alternative fuels could also be explored if the supply situation worsens, according to industry insiders.
Meanwhile, an industry body representing CGD companies—which retail CNG for vehicles and piped gas to households in addition to supplying gas to certain industrial units—has cautioned that the reduction in regasified LNG supply to CGD companies could have a “significant impact’ on gas availability.
While CGD entities get a bulk of their supplies for the priority segments of CNG and household piped gas from the country’s domestic gas output, they do depend partly on imported LNG for these segments. Their dependence on imported LNG is much higher for their commercial and industrial customers. On an overall basis, the CGD sector depended on imported LNG to meet around 43% of the demand, as per data from the Petroleum Planning and Analysis Cell of the MoPNG.
“We request clarity and confirmation regarding the sustained availability of gas to the city gas sector so that the sector can continue to serve the aspirations and objectives set by the Government of India for providing a reliable and sustained energy to smaller customer segments in the remotest corners of the country,” the Association of CGD Entities (ACE) wrote in a letter to GAIL’s Chairman Deepak Gupta.
A liquefied natural gas export facility on Canada’s Pacific coast is set to supply Germany under a new agreement tied to the proposed Ksi Lisims terminal in British Columbia. (File Photo) 
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