Middle East Conflict Halts Qatar's LNG Production, Threatening India's Energy Supply

New Delhi. Due to the ongoing war in the Middle East, Qatar, India's largest supplier of gas, has shut down production in its liquefied natural gas (LNG) industry.  

This has halted the movement of ships destined for India and resulted in a supply cut of up to 40 percent in the domestic market. India imports 40 percent of its LNG needs (approximately 27 million tonnes annually) from Qatar.  

LNG arriving from abroad is converted back into gas to supply CNG and PNG. Following the halt in supply, urban gas distribution companies have warned that the prices of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) could increase if the situation does not improve quickly.  

Oil and Gas Supply Route Nearly Blocked

The biggest challenge for India is the near closure of the 'Strait of Hormuz'. This is a narrow sea lane through which countries like Qatar and the United Arab Emirates (UAE) export their oil and gas. This route is no longer safe due to the conflict between Iran and Israel.  

On February 28, 91 ships passed through this strait, which has now reduced to only 26.  

India imports 50 percent of its crude oil requirement and 54 percent of its LNG through this route. Petronet's three largest vessels are currently unable to reach Qatar's Ras Laffan port.

According to Qatar Energy, Iran attacked industries located in Qatar's 'Ras Laffan' and 'Mesaieed' industrial cities using unmanned aerial vehicles (drones). The company has currently stopped LNG production due to security concerns.

Following attacks by the US and Israel in Iran, Iran retaliated by targeting US bases and ports in countries such as the UAE, Qatar, Kuwait, and Saudi Arabia.  

Threat to Chemical Fertilizer and Electricity Production Also Looms

Imported LNG in India is used not only for homes and vehicles but also for electricity generation and urea (chemical fertilizer) production. If the gas shortage persists, electricity produced by gas-based power industries will become more expensive.  Gas is a primary raw material for the chemical fertilizer sector, and a reduction in supply is expected to affect fertilizer production as well.  

From Bhaskar