Impact of Iran Conflict on India's Energy Supply
The ongoing conflict involving Iran has already unsettled India's liquefied petroleum gas (LPG) market. Attention is now turning to another vital energy source: the country's rapidly growing piped natural gas (PNG) network, which delivers gas directly to homes and businesses.
Demand and Growth of Piped Natural Gas
PNG demand arises from various sectors including fertiliser plants, industrial users, gas-fired power generation, and city gas networks that supply PNG to households and compressed natural gas (CNG) to vehicles. Among these, the expansion of city gas to homes stands out as a significant growth area, steadily increasing as the network extends across urban India.
India currently has over 15 million PNG connections, a figure that continues to rise rapidly as government policies encourage households to replace traditional gas cylinders with piped gas connections.
Simultaneously, demand for CNG vehicles has also grown consistently, with CNG now ranking as India's second-largest automotive fuel after petrol.
Given the challenges faced by LPG tankers navigating the Strait of Hormuz, many urban Indian households are concerned whether the gas supplied through their kitchen pipelines might also be affected.
Supply Composition and Government Priorities
India's piped gas supply is sourced from a combination of domestic production and liquefied natural gas (LNG) imports. Approximately half of the PNG supply comes from domestic gas extracted from onshore and offshore fields by companies such as ONGC and Reliance. The remaining demand is met through LNG imports.
"No disruption is expected for homes and vehicles [using piped gas]. The government has given priority to these two sectors," says Rahul Chopra, managing director for Haryana City Gas Distribution Limited, a nationwide gas company serving around 100,000 domestic consumers and operating 195 CNG fuel stations.
However, about 2,200 industrial and commercial customers of Chopra's company are currently subject to a government-mandated 20% supply reduction as gas is redirected to households and vehicles.
Supply Management During Constraints
In times of supply constraints, the government prioritises essential sectors, particularly fertiliser plants and households connected to piped gas. Consequently, industrial and power generation sectors are typically the first to experience supply reductions.
When LNG prices surge or cargo availability tightens, factories often switch to alternative fuels such as fuel oil, LPG, or coal. Gas-fired power plants may reduce their electricity generation accordingly.
Exposure to Global Market Shocks
Despite the buffer provided by domestic production, India's piped gas system, like its LPG market, remains vulnerable to international market disruptions. In recent years, LNG has accounted for roughly half of the country's total gas availability. In 2025, India imported approximately 24-25 million tonnes of LNG, positioning it among the world's largest LNG consumers.
A significant portion of these imports originates from Qatar, with over half of India's LNG imports secured through long-term contracts with Qatari suppliers. Additional volumes come from the United States, Australia, Russia, and parts of Africa.
Strategic Maritime Route and Current Conflict Risks
LNG shipments from Qatar and the United Arab Emirates transit the Strait of Hormuz, a narrow maritime chokepoint currently at the center of the Middle East conflict following US and Israeli military actions against Iran. Approximately 50-55% of India's LNG imports pass through this corridor.
To date, the flow of LNG has not been completely halted. Tankers loaded prior to the escalation of the conflict continue to arrive in India.
"Supplies have not been completely disrupted yet. Cargoes that loaded in Qatar before the conflict escalated are still arriving in Asia," states Go Katayama, principal insight analyst for LNG and natural gas at Kpler Insight, a commodity intelligence platform.
Shipping data from Kpler indicates that 13 LNG cargoes loaded between 10-26 February are currently en route to India, with deliveries expected to continue through March.
However, exports from Qatar's Ras Laffan LNG complex, which has an annual capacity of 77 million tonnes, have been suspended since 2 March. This suggests that the current shipments may be among the last until safe passage through the Strait of Hormuz is restored, according to Katayama.
Storage and Market Vulnerabilities
This situation does not imply an immediate gas shortage in India but underscores a structural vulnerability. Unlike crude oil, India does not maintain strategic LNG reserves. Gas storage is primarily maintained as working inventory at regasification terminals such as Dahej, Hazira, Kochi, and Ennore, which convert imported LNG back into gaseous form.
These storage facilities typically provide coverage for about one to two weeks of imports, depending on terminal operations and cargo schedules, explains Katayama. The system relies on a consistent arrival schedule of LNG shipments; any disruption to this rhythm necessitates rapid market adjustments.
Implications for Urban Consumers and Industry
For urban consumers relying on piped gas, the immediate concern is more about price increases than supply shortages. Should disruptions at the Strait of Hormuz persist, India's gas market is expected to respond through elevated prices and reduced industrial demand.
"There is some price rise expected," says Chopra.
Ultimately, both households and industries will face higher costs, with industrial users likely to experience more significant supply reductions.
