MoPNG Invokes Essential Commodities Act to Prioritise Natural Gas Amid Hormuz LNG Disruption

MoPNG Invokes Essential Commodities Act to Prioritise Natural Gas Amid Hormuz LNG Disruption Overview In a gazette notification dated 9 March 2024 , the Ministry of Petroleum and Natural Gas invoked the Essential Commodities Act, 1955 to channel natural gas to designated priority sectors. The move responds to a looming shortage caused by disruptions in LNG shipments that transit the Strait of Hormuz . Approximately 30% of India’s gas imports rely on this route, and suppliers have invoked forced majeure . Key Developments Priority allocation granted to domestic piped gas, CNG for transport, and LPG production, with a guarantee of 100% supply subject to operational availability. Fertiliser plants to receive 70% of their average consumption over the past six months. Industrial and manufacturing consumers connected to the gas grid to be assured 80% of their prior six‑month consumption. Oil refineries, including ONGC Petro additions Ltd., GAIL Pata Petrochemical and Reliance O2C, to face a reduction to roughly 65% of their historic gas usage. The allocation is based on average consumption data from the preceding six months, ensuring transparency and predictability. Important Facts India’s total natural gas consumption stands at 195 million metric standard cubic metres per day (MMSCMD) . India imports about 50% of its natural gas requirement. Disruption in the Strait of Hormuz could have “catastrophic” effects on global oil markets, as highlighted by industry leaders. The government earlier this week used the same act to prioritise LPG supply to domestic consumers. UPSC Relevance Understanding this policy helps aspirants answer questions on: Energy security – the strategic importance of diversifying import routes and domestic allocation mechanisms (GS3). Regulatory tools – the use of the Essential Commodities Act to manage scarcity (GS3). Geopolitics of energy – how tensions in West Asia affect India’s energy imports and policy responses (GS3). Industrial policy – tiered allocation reflects the government’s prioritisation of essential services and strategic industries (GS3). Way Forward To mitigate future supply shocks, the government may consider: Developing alternative LNG import terminals outside the Hormuz corridor. Accelerating domestic gas production through shale and offshore exploration. Enhancing strategic petroleum reserves for natural gas. Promoting renewable energy and hydrogen as long‑term substitutes for fossil fuel dependence. These steps align with India’s broader energy security and climate commitments under international accords.