New Delhi: India has ramped up spot purchases of liquefied natural gas (LNG) after contracted cargoes from Qatar were disrupted by the ongoing West Asia conflict, exposing structural vulnerabilities in the country’s energy supply and pressuring government finances.
That disruption’s really exposed some gaps in India’s energy system and hit government finances hard. After none of India’s 16 gigawatts of gas-grid-connected power plants got their usual Qatari LNG in April, May, or June, spot purchases by Indian utilities shot up almost 300 percent, according to industry folks talking to LNG Journal. The government itself grabbed seven spot cargoes just for June—the most in recent memory. Big importers like Bharat Petroleum, GAIL, and Gujarat State Petroleum Corporation also jumped in, snapping up shipments between April and June. They managed to get prices just under $16 per million British thermal units from mid-April tenders.
Everything spiraled after Iranian strikes damaged Qatar’s Ras Laffan facilities back in March. QatarEnergy said that took out about 17 percent of their export capacity—roughly 12.8 million tonnes a year. Fixing things is expected to take three to five years, so there’s an immediate hole in global LNG supplies. India’s feeling the pain, since the country brought in 11.2 million tonnes from Qatar last year (out of a total 27 million tonnes). To plug the gap, India shifted purchases to suppliers in Oman, Nigeria, the US, and Angola. But buying on the spot market isn’t cheap. Morgan Stanley predicts Asian LNG benchmark prices might hit $25 per million Btu by late 2026—the highest since early 2023 and way above current forecasts. They expect supply to fall short by about 15 million tonnes next year.
These higher prices are already shaking up India’s economy. The government raised its fertilizer subsidy by over 11 percent in April, setting aside 415.34 billion rupees ($4.5 billion) for the summer. Analysts think the total fertilizer subsidy for fiscal 2026–27 could balloon by 700 billion rupees, reaching 2.41 trillion rupees—way above the planned 1.71 trillion. Most of that extra cost comes from pricier imports of urea and other fertilizer ingredients.
This crisis isn’t just about money—it’s a clear reminder that India relies heavily on the Middle East for energy. Around 58 percent of India’s LNG imports come from the region, making up about 2 percent of total primary energy use. The government says piped gas for homes and vehicles is mostly unaffected, but industrial users are getting rationed and face fierce competition for available shipments. Right now, everyone’s scrambling to secure cargoes from other countries and manage demand with rationing and updates to contracts.
Looking ahead, policymakers and industry leaders are talking about boosting domestic gas production, speeding up expansion of LNG terminals, diversifying supply deals, and even building strategic gas storage to better handle future shocks. But, at the end of the day, India’s mad dash for spot LNG just shows how quickly regional conflict can mess up global energy markets—forcing countries like India to make fast (and expensive) adjustments.
