The government on Tuesday moved to restrict natural gas supplies, giving priority to households receiving pipeline gas, CNG-powered vehicles, and units producing cooking gas, as conflict in West Asia disrupted LNG shipments through the Strait of Hormuz.
“The ongoing conflict in the Middle East has disrupted LNG shipments through the Strait of Hormuz,” the Ministry of Oil and Natural Gas said in an order, adding that the new rules “will ensure equitable distribution and continued availability to priority sectors.”
The ministry on Monday night notified the Natural Gas (Regulation of Supply) Order 2026, citing the Essential Commodities Act, 1955 – giving the directive overriding authority over all existing gas sales agreements and commercial arrangements.
The order creates a four-tier priority system for allocating gas, with supplies reduced to lower priority sectors – including petrochemical plants, power plants and oil refineries – to meet essential demand.
According to people familiar with the matter, Prime Minister Narendra Modi met Petroleum Minister Hardeep Singh Puri and External Affairs Minister S Jaishankar ahead of the Cabinet and Cabinet Committee on Economic Affairs (CCEA) meetings on Tuesday. A person familiar with the matter said that Cabinet members were briefed on the supply situation during their meeting and told that there was no reason to panic.
The Cabinet was informed that issues related to LPG supply are expected to be resolved within a day or two and instructions have been issued, this person said, adding that Union Home Minister Amit Shah and Finance Minister Nirmala Sitharaman have been in touch on the issue.
But even as the government moved to protect household supplies, the impact of limited imports was already rippling down to commercial consumers. Restaurants in several cities have reported running out of cooking gas, industry bodies have warned of mass closures affecting hundreds of thousands of establishments, and at least one state chief minister has written to the Center seeking urgent intervention.
India’s total gas consumption in 2024-25 was about 71.3 billion cubic metres, with 50.1% dependence on import, according to the Petroleum Planning and Analysis Cell (PPAC). Experts say that the conflict in West Asia has disrupted about a third of total liquefied natural gas imports. The balance of India’s imports of liquefied natural gas comes from the United States, Russia and Australia.
India imports natural gas in LNG form, which, once regasified, feeds a network of pipelines that supply PNG to homes and CNG to vehicles. LPG – the cooking gas used by homes and commercial establishments – is a separate product, but its domestic production partly relies on natural gas processing, meaning interruptions to LNG imports are putting pressure on both supply chains.
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Under the first tier, gas requirements for domestic PNG, CNG for transportation, LPG production, pipeline compressor fuel, and other essential pipeline operations will be fully met, based on average consumption over the past six months, the order said.
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Fertilizer factories are placed in the second level, with their allocations maintained at 70% of their average consumption for six months. Natural gas serves as the fuel and feedstock for fertilizer production, and the order states that the designated gas supply “shall not be used for any other purpose” except for fertilizer production. Units must submit a certificate to this effect to the PPAC.
The third level covers industrial and other industrial consumers, including the tea industry, which are supplied by the national gas grid, which is maintained at 80% of their average consumption. Industrial and commercial consumers supplied by City Gas Distribution (CGD) networks also constitute the fourth layer at 80%.
To meet priority sector demand, gas supplies will be fully or partially curtailed from petrochemical facilities – including ONGC Petro Additions Limited, GAIL Pata petrochemical complex, and Reliance Industries’ O2C business – as well as power plants. Oil refineries have to absorb reductions amounting to approximately 65% of their consumption over the past six months.
The Gas Authority of India Limited (GAIL), in coordination with PPAC, will manage the supply and conversion. The combined price of the converted gas will be notified by PPAC; Priority entities must accept this price, cannot sue over it, and are prohibited from reselling the diverted gas.
Reliance Industries Ltd (RIL), India’s largest private refiner, said on Tuesday that it will increase LPG production from its refining and petrochemical complexes in Jamnagar, with teams working around the clock to optimize refining operations and boost LPG production so that supplies to the domestic market remain stable and reliable.
“At a time when global energy markets are witnessing volatility, ensuring uninterrupted access to essential fuels for Indian households remains a national priority. Reliance Industries is taking proactive steps and in line with government guidelines,” it said in a statement.
It also said that natural gas produced from the RIL-operated KG-D6 basin will be diverted to support supply to priority sectors, in line with national energy priorities and government guidelines.
Restaurants in many cities began scaling back operations or closing their doors as commercial LPG supplies dried up, with some establishments reporting that they received barely 20% of their usual cylinder shipments on March 9 before supplies dried up completely.
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“The supply problems started on March 9,” said Arun Adiga, managing partner of Vidyarthi Bhavan, a Bengaluru restaurant with a history dating back nearly eight decades. “Most hotels received only about 20% of their usual cylinder shipments, and since then the supply has completely stopped. The distributors themselves are not receiving cylinders, so restaurant service has been effectively cut off.”
Narendra Somani, president of the All India Caterers Federation and president of the Gujarat Hotels and Restaurants Association, said 20% of restaurants in Gujarat could close if the suspension continues. “In areas like Manek Chowk and Le Jardin where many roadside stalls operate with LPG cylinders, they are likely to be closed from today as gas supply will run out,” he said.
The National Restaurant Association of India has written to the Petroleum Minister seeking continued supply of commercial LPG cylinders, warning that the disruption will impact a sector that represents over 500,000 restaurants and provides employment to over eight million people.
R. wrote Karnataka Chief Minister Siddaramaiah to Puri on Tuesday urged him to intervene, saying: “Several hotels and restaurant associations in the city have reported that they are unable to procure commercial LPG cylinders, and several establishments are expressing concern that they may have to temporarily shut down their operations if supplies are not restored soon.”
A letter issued by the All India LPG Distributors Association on March 9 said that supply of commercial LPG cylinders to non-essential establishments, including hotels and restaurants, has been temporarily suspended due to the geopolitical situation.
State-run oil marketing companies have prioritized domestic LPG supplies to households and introduced a minimum time period of 25 days between refills of subsidized fuel – extended from 21 days – to reduce hoarding and black marketing, Reuters reported. The government also raised cooking gas prices on Saturday for the first time in a year.
(With inputs from HTC in Bengaluru and Ahmedabad)
