India Protects City Gas as Hormuz Crisis Cuts South Asia’s LNG Demand
What Happened
Disruptions to LNG shipments through the Strait of Hormuz—a key route for Qatari and UAE exports—have forced South Asian countries to ration gas and absorb higher costs. India’s response: Prioritised city gas distribution for households and transport. Cut supplies to fertiliser plants, refineries, and industrial users in March–April. Government subsidies sustained fertiliser output, with daily urea production rising by 12,000–15,000 tonnes and monthly output hitting record highs of 25.19 lakh tonnes in May and 25.37 lakh tonnes in June. LNG tender prices rose from $16.8–$18.8 per mmBtu (March–June) to $26.4 per mmBtu in September. Regional impact: South Asia’s LNG demand is expected to fall by 6 million tonnes in 2026, reversing earlier growth projections of +2.7 million tonnes (7%). Pakistan: 99% of LNG imports came from Qatar in 2025; demand destruction exceeded 2.5 million tonnes due to curtailed supplies. Bangladesh: Over 70% of LNG imports from Qatar; faced prolonged power outages and turned back to coal. Spot cargoes cost $23–$28 per mmBtu. The International Energy Agency (IEA) noted that nearly 90% of Qatari and UAE LNG shipments transit Hormuz, making Asia highly vulnerable to disruptions.
Key Takeaways
India’s tiered rationing strategy has cushioned households and city gas users from the worst of the crisis, though industries face higher costs. The episode underscores South Asia’s structural vulnerability to Gulf LNG supplies and highlights the urgent need for diversification, domestic production, and renewable alternatives.