New Delhi: India has sufficient oil stocks to manage any short-term disruption from the Gulf conflict, the oil ministry said on Tuesday.
The assurance came a day after an Iranian drone attack forced the shutdown of an LNG facility in Qatar, India’s top supplier, forcing state-run gas marketers to sharply cut supply to several industries.
The blockage of the Strait of Hormuz for the third consecutive day, along with attacks on energy installations, sent global crude oil and gas prices soaring. Crude traded above $84 a barrel on Tuesday, up 15 per cent since Friday’s close, while the European gas benchmark Dutch TTF futures neared €62 per megawatt-hour, a jump of 90 per cent since Friday.
‘Can take phased measure’
“The government is cautiously optimistic that phased measures can be taken, if required, to further mitigate the situation,” the ministry said in a statement, without elaborating.
Meanwhile, Petronet LNG, India’s largest natural gas importer and a key Qatari client, declared force majeure on Monday. It cut supplies by 33 per cent on Monday and 67 per cent on Tuesday to its customers GAIL, BPCL and IndianOil.
In a cascading effect, GAIL, Indian Oil, and BPCL began curtailing supplies to several industrial customers, with cuts reaching as much as 60 per cent in some cases.
“Petronet is probably trying to conserve volumes given the situation in the Gulf,” said a person familiar with the matter.
Power producers, city gas distributors, and some other industrial customers have been affected, the person added, though fertiliser producers and very small industrial users have so far been spared.
However, if supplies tighten further on Wednesday, all consumers spanning small ceramics units to large steel and cement plants could be hit.
Notably, industrial demand is expected to remain subdued over the next two to three days as factory workers would be away for Holi festival celebrations. Once they return, gas demand would rebound while supplies would fall short if the current scenario continues, said a city gas company executive.
Securing alternative suppliers could also prove difficult as global LPG markets are currently tight, leaving factories with little choice but to scale back operations, the executive said.
Refineries, though significant gas consumers, can switch to alternative fuels such as fuel oil.
India produces half of the natural gas it consumes and follows a priority allocation ladder.
Households get their entire supply from domestic gas and will continue to do so, the executive said.
Even before the closure of the Qatari LNG facility, Petronet had been struggling to lift cargoes, with two of its tankers unable to cross the Hormuz — one lingering off the Qatari coast and another waiting on the Indian side of the chokepoint.
