The ongoing conflict in West Asia has significantly disrupted global fuel supply chains, impacting India’s liquefied petroleum gas (LPG) imports. In response to these challenges, the Central Government of India has taken decisive action to regulate the supply of natural gas within the country.
Key Developments
On March 9, 2026, the Central Government issued the Natural Gas (Supply Regulation) Order, 2026, aimed at ensuring an equitable distribution of natural gas amid the disruptions caused by the West Asia conflict. This order was enacted under the Essential Commodities Act of 1955, highlighting the government’s commitment to managing essential resources during crises.
Priority Sectors Defined
The regulation categorizes consumers into four priority sectors to streamline gas distribution. Priority Sector I includes domestic piped natural gas (PNG), compressed natural gas (CNG), LPG production, and essential pipeline operational needs, which will receive 100% of their average gas consumption. Priority Sector II, which encompasses fertilizer plants, is allocated 70% of their average gas consumption.
Priority Sector III covers tea industries and other industrial consumers connected to the national gas grid, who will receive 80% of their average consumption. Similarly, Priority Sector IV applies to industrial and commercial consumers supplied through City Gas Distribution (CGD) networks, also receiving 80% of their average consumption. This structured approach aims to prioritize critical sectors while managing limited resources effectively.
Impact on Non-Priority Sectors
To meet the requirements of these priority sectors, gas supplies may be curtailed from non-priority sectors. Oil refineries have been specifically directed to reduce their gas consumption to approximately 65% of their average usage over the past six months. This reduction is part of a broader strategy to ensure that essential services and industries maintain access to necessary gas supplies during this period of uncertainty.
Implementation and Management
The order also mandates that all entities involved in natural gas, including GAIL, ONGC, Reliance Industries Limited, Oil India Limited, and Vedanta Limited, furnish detailed information on production, imports, stocks, allocation, and consumption to the Petroleum Planning and Analysis Cell. GAIL has been designated to manage the diversion and redistribution of natural gas under this order, ensuring a coordinated response to the supply challenges.
Current State and Future Considerations
As of now, the government has prioritized LPG supply for households to ensure energy security for citizens amid ongoing uncertainty in the global oil and energy markets triggered by the West Asia crisis. Non-domestic supplies from imported LPG are being directed to essential non-domestic sectors such as hospitals and educational institutions, reflecting the government’s focus on safeguarding critical infrastructure.
The Natural Gas (Supply Regulation) Order, 2026, represents a significant step by the Indian government to manage natural gas supply amidst global disruptions. The order aims to ensure equitable distribution of gas after liquefied natural gas (LNG) shipment disruptions, which have affected liquefied natural gas shipments through the Strait of Hormuz. Suppliers have invoked force majeure and diverted gas supplies to priority sectors, underscoring the urgency of the situation. As the situation evolves, the effectiveness of these measures will be closely monitored to ensure that the needs of all sectors are met while navigating the complexities of the current global energy landscape.
