Current Affairs
Qatar’s LNG Crisis: How the Ras Laffan Strikes Impacting India’s LNG Supply
Iranian attacks have knocked out 17% of Qatar’s liquefied natural gas (LNG) export capacity, causing an estimated $20 billion in lost annual revenue.
Iran’s missile strikes on Qatar’s Ras Laffan Industrial City, the world’s largest LNG hub have sent shockwaves far beyond West Asia. Qatar Energy CEO confirmed that the attacks have wiped out 17% of Qatar’s LNG capacity, a loss expected to last three to five years, costing an estimated $20 billion in annual revenue.
India is Qatar’s largest LNG customer, sourcing over 41% of its LNG needs from Ras Laffan alone. Combined with the effective closure of the Strait of Hormuz, the transit route for 90% of India’s LPG and 60% of its LNG, the country faces an unprecedented energy supply crisis with ripple effects across households, industry, and agriculture.
How Dependent Is India on Qatar’s LNG?
India depends on imports to meet over 88% of its crude oil needs, 60% of its LPG, and approximately 50% of its natural gas requirements. West Asia accessed primarily through the Strait of Hormuz is the nerve centre of this import dependence.
Qatar alone accounts for 41.4% of India’s total LNG imports. In 2024–25, India imported 27 million tonnes of LNG, of which 11.2 million tonnes came from Qatar almost entirely from the now-damaged Ras Laffan facility. Petronet LNG, India’s largest importer, holds a long-term contract for 7.5 MTPA with QatarEnergy, now under force majeure.
The Strait of Hormuz is equally critical for India’s other energy needs. Around 2.5- 2.7 million barrels per day (bpd) of India’s crude imports roughly half its total oil imports, normally transit the Strait. Sources include Iraq, Saudi Arabia, UAE, and Kuwait. With the Strait effectively shut, India’s entire Gulf energy supply chain is under simultaneous stress.
LPG Supply Crisis: Impact on Indian Households
The most immediate impact of the West Asia conflict on ordinary Indians has been the LPG supply crisis. A staggering 90% of India’s LPG imports pass through the Strait of Hormuz. With the Strait effectively closed and Gulf production facilities under attack, India’s household cooking fuel supply has come under severe pressure.
The government has responded by invoking emergency powers to prioritise domestic LPG supplies for household users and scaling up refinery production. According to the Petroleum Ministry Joint Secretary, LPG bookings fell to around 57 lakh on 18 March; the pre-conflict daily average was 55.7 lakh cylinders. Due to panic booking, the number of cylinder bookings had touched almost 88 lakh on March 13.
Macroeconomic Impact: Rising Import Bills and a Weakening Rupee
The energy price shock has significant macroeconomic consequences for India. Brent crude has crossed $118 per barrel, over 50% above pre-conflict levels. For a country that imports 88% of its crude oil, this surge translates directly into a ballooning import bill, widening the current account deficit, and adding depreciation pressure on the rupee.
Many of India’s long-term LNG contracts are linked to oil prices. Any additional volumes needed must now be sourced from the spot market, which is trading at crisis-level highs. This dual pressure, higher oil prices and surging spot LNG rates significantly aggravates India’s energy import costs in the near term.
Price-sensitive industrial users including small gas distributors, fertilizer plants, and power generators are already exploring switching to alternative fuels like naphtha, petroleum coke, or fuel oil, though these options are either costlier or more polluting, creating a difficult trade-off.
India’s Response: Emergency Diversification and Supply Security
The Indian government has responded on multiple fronts to address the crisis in LNG supply chains and broader energy security. The response combines emergency procurement, diplomatic outreach, and accelerated structural diversification.
Immediate Measures
- LNG sourcing from the US and Australia: India is actively negotiating alternative LNG cargoes from the US (e.g., Sabine Pass) and Australia to partially offset the loss of Qatari supplies, though longer shipping routes mean higher freight costs and slower delivery.
- Russian oil waiver: A US Treasury 30-day waiver permits Indian refiners to purchase stranded Russian oil and gas, which India has used to raise its non-Hormuz crude supply share from 60% to approximately 70%.
- Maximising domestic refinery LPG yields: Domestic LPG production has been ramped up by 36–38%, according to the latest government data.
- PNG infrastructure push: States have been urged to clear pipeline applications within 24 hours to fast-track transition from LPG cylinders to piped natural gas for urban households.
Medium-Term Strategy
- Diversifying crude imports: India has increased crude purchases from Russia, the US, West Africa, and Latin America to reduce Gulf dependence.
- Strategic reserves: India maintains strategic petroleum reserves (SPR) at Visakhapatnam, Mangaluru, and Padur to manage crude oil demand in crisis situations. But no such national buffer exists for LPG. Analysts are calling for an equivalent strategic LNG reserve to protect gas-dependent industries.
- Renewable energy acceleration: The crisis has reinforced the urgency of India’s renewable energy targets as a structural hedge against geopolitical energy disruptions.
Challenges Ahead: Why Diversification Has Its Limits
India sits among the most exposed LNG buyers globally. More than half its LNG imports come via Hormuz, making the country vulnerable to both physical supply disruptions and prolonged price shocks simultaneously. So, the diversification can lead to some significant constraints:
- Higher freight costs: LNG from the US or Australia involves voyages that are 2–3 times longer than the Qatar-India route, adding substantially to landed costs.
- Spot market competition: Multiple Asian buyers including Japan, South Korea, China are simultaneously competing for limited alternative cargoes, pushing spot prices even higher.
- No near-term US/Australian spare capacity: New US LNG projects (Golden Pass, CP2 LNG Phase 2) won’t deliver meaningful output before 2027–28. Australia’s legacy projects are already near full capacity.
- Fertilizer season pressure: The approaching kharif sowing season makes gas supply to fertilizer plants a national priority, limiting the government’s flexibility in managing demand.
Conclusion
The Ras Laffan strikes and the resulting disruption to Qatar’s LNG capacity have significantly impacted India’s energy architecture. Decades of deepening dependence on Gulf energy channelled through a single maritime chokepoint has left India exposed to the compounding effects of production loss, transit blockade, and price shock, all simultaneously.
Overall, the West Asia conflict has not just disrupted energy flows; it has accelerated a long-overdue rethinking of India’s energy security doctrine.
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Qatar’s LNG crisis and its impact on India FAQs
1. How much of Qatar’s LNG capacity was destroyed in the Iranian strikes on Ras Laffan?
Ans. 17%
2. Which Indian company holds a long-term LNG contract with QatarEnergy that is now under force majeure?
Ans. Petronet LNG
3. What percentage of India’s LPG imports pass through the Strait of Hormuz?
Ans. 90%
4. How many days of net oil import buffer does India currently maintain in strategic reserves?
Ans. Approximately 74 days
5. Which alternative LNG sources is India negotiating with to replace Qatari supply?
Ans. The US (Sabine Pass) and Australia
