India’s industrial sector is bracing for a severe energy crunch after Qatar, the nation’s primary supplier of liquefied natural gas (LNG), declared "force majeure" on its deliveries.

This legal declaration, which suspends contractual obligations due to extraordinary circumstances, follows a complete halt in Qatari gas production after a series of Iranian drone strikes targeted energy infrastructure in the Gulf.

The resulting supply gap has forced Indian gas marketers to slash allocations to industrial consumers by up to 40 per cent to preserve stocks for essential services.

The disruption strikes at the heart of India’s energy security, as Qatar provides approximately 40 per cent of the 27 million tonnes of LNG that India imports annually. Major gas importers, including Petronet LNG Ltd, have notified key off-takers such as GAIL (India) Ltd and Indian Oil Corporation (IOC) that scheduled cargoes from the Ras Laffan loading port are no longer guaranteed.

While the government has mandated that flow rates for CNG retailing and domestic piped cooking gas be maintained, critical sectors like fertiliser production, power generation, and glass manufacturing are already experiencing significant curtailments.

The crisis is being exacerbated by a near-total blockade of the Strait of Hormuz, the world’s most vital maritime chokepoint for energy. With Iran asserting control over the narrow waterway—through which more than half of India’s crude oil and LNG imports must transit—tanker traffic has plummeted by over 90 per cent.

The perceived risk has caused war-risk insurance premiums to skyrocket, and the daily charter rates for LNG tankers have doubled to over $2,00,000, making alternative sourcing a prohibitively expensive endeavour for state-run firms.

In response to the shortfall, Indian energy giants are desperately scouring the global spot market for replacement cargoes. However, the timing could not be worse; spot prices for LNG have surged to $25 per million British thermal unit (mmBtu), roughly double the rates secured under India’s long-term contracts with Qatar.

This price spike threatens to widen India’s current account deficit and put immense pressure on industrial margins, with many factories in western and northern India already reporting reduced operational shifts due to the lack of fuel.

The Petroleum Ministry has convened emergency meetings to manage the domestic fallout, with officials considering the prioritisation of gas for "nationally important" industries if the disruption extends beyond a week.

While India holds some strategic reserves, the sheer volume of Qatari gas required for daily operations means that any prolonged shutdown will lead to further rationing. As the military conflict between the US-Israeli coalition and Iran shows no signs of abating, the stability of India’s energy-dependent manufacturing sector remains tethered to the volatile security situation in the Persian Gulf.

PTI