Iran's attack on Qatar's Ras Laffan LNG plant might affect India (IMAGE: X)
LPG CRISIS IN INDIA: The Iranian retaliation against the Israeli strike on the Iranian South Pars gas facility by attacking the Qatar energy infrastructure at Ras Laffan industrial city is not good news to India, where more than 88 percent of its imports are crude oil and approximately 50 percent by gas.
India was already facing a disruption of its imports of gas, which was being supplied by its single-largest supplier, Qatar which supplied one-third of its total liquefied petroleum gas (LPG) imports, and nearly half its liquefied natural gas (LNG) imports.
New supreme leader Mojtaba Khamenei threatened to retaliate by launching the biggest LNG plant in the world in Qatar and intensified its retaliatory attacks against the US-Israel.
The facility will be affected, which will in turn affect us. This can only be solved by diversification of sources. That is what was consulted, according to Sujata Sharma, the joint secretary at the Ministry of Petroleum and Natural Gas, on March 19, in a press conference.
According to Sharma, India imports 90 percent of its fuel in West Asia, and almost half of the LNG requirement is produced by Qatar. Our world is impacted by West Asian supply upsets.
According to Sharma, US, Australia are major suppliers to India in terms of LNG.
In the meantime, after a wave of attacks on the Iranian energy infrastructure and Qatar’s retaliation by attacking the Ras Laffan LNG plant, the price of Brent crude oil has soared to $114 per barrel on March 19.
The oil ministry, however, reported that there was no growth in retail of petrol and diesel. As of today, there is no price increment, Sharma said.
In response to the concept of the prohibition of export of the refined products under the circumstances of increasing tension in West Asia and the destabilization in the Indian oil and gas supplies, Sharma noted domestic consumption of refined oil products to be a priority.
Previously, the interruption was primarily caused by transport-related factors owing to the Strait of Hormuz blockage, which is a rather short-term issue of interest.
Post-war or alleviation will leave India with issues to face depending on the level of damage inflicted by the Iranian attack at the Ras Laffan since the LNG and PNG would be sourced there since it will need time to restore its facilities.
The Indian companies like Petronet LNG Ltd (PLL), GAIL India and GSPC have multi-year commercial advantageous gas supply contracts with Qatar. PLL was importing approximately 7.5 million tonnes of LNG per annum (MTPA) of Qatar, GSPC 1 MTPA and GAIL less than 1 MMTPA LNG sources.
The fact that Iran launched a missile attack on one of the major importers of energy in India, the Ras Laffan LNG hub in Qatar (the largest in the world) has a direct effect.
As Qatar provides about 40-50 percent of the LNG to India, as well as a large part of its LPG, the attack, and Strait of Hormuz disruption have triggered an immediate shortage in supply, fuel prices, and possible natural gas rationing to the industry.
LPG & Energy Crisis: India is under a threat of LPG shortage, and already there have been reported long queues in some parts of the country in availing cooking gas. India imports LPG at around 62 percent with a large portion of this being the imports of the Gulf.
Soaring Fares and inflation: The attack has increased the prices of international energy, which will probably create inflationary pressures to CNG, PNG, and household LPG.
Industrial Impact: Industries relying on natural gas, such as fertilizer plants, have been reported to only receive 70 percent of the needed supply, which may cause reduction in the production, and even leave India more dependent on the expensive imports.
Strategic Vulnerability: In India, approximately 90 percent of the imported fuel goes over the Strait of Hormuz, which is a source of conflict.
Alternative Supplies: India is in the process of exploring as diversifying suppliers in such a tight global market is difficult.
in domestic consumption of refined oil products a priority should be given.
Previously, the interruption had been primarily caused by transport problems as a result of the congestion of the Strait of Hormuz, a relatively short-term source of anxiety.
The destruction of Ras Laffan Gas-to-Liquids facility is currently a more significant concern since the recovery of the given facility will require time once the conflict in the region concludes. Follows recent updates in Qatar LNG plant assault.
India will not be off the hook even when the war is over or subsides as the damage inflicted by the Iranian attack at Ras Laffan will determine how long India will face problems since LNG and PNG resources in the area will be limited by the time it would repair its facilities.
The companies like Petronet LNG Ltd (PLL), GAIL India, and GSPC are Indian companies with long-term commercially advantageous contracts of supplying gas with Qatar.
PLL has been importing 7.5 million tonnes per annum (MTPA) of LNG, Qatar, GSPC 1 MTPA, and GAIL less than 1 MMTPA of LNG annually.
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