LNG stalled in Qatar! Crisis on India’s 40% gas supply, know what is the government’s plan?

India’s liquefied natural gas supply has suffered a severe blow due to the ongoing war in West Asia. The crisis in the energy sector has deepened as almost 40 percent of the LNG supply from Qatar has been affected. The government has now started working rapidly on a new ‘optimization plan’ for gas distribution, giving priority to priority sectors like fertilizers, so that there is no major impact on important sectors.

The Petroleum Ministry may soon finalize this new arrangement, which may possibly be implemented by today i.e. Tuesday. Experts believe that this may lead to some reduction in the fertilizer sector, but it will not have any adverse effect on farming.

Impact on fertilizer sector and government strategy

The media has quoted sources as saying that there is a possibility of a slight reduction in the gas supply to the fertilizer sector in the new distribution plan. However, the government is ensuring that there is no impact on farming.

Gas supply ensured

Adequate gas will be made available to the fertilizer units to operate at their optimum level of capacity.

proper maintenance time

At present, low availability of gas has not become a major problem, because many fertilizer companies are using this period for maintenance shutdown of their plants.

Period of recession and decrease in demand

According to the Fertilizer Association of India, at present the demand for fertilizers in the agricultural sector is low. Sowing of Kharif crops will start in June, hence the consumption during this period remains moderate, which gives the industry an opportunity to fill and maintain the stock.

No worries due to bumper stock

According to statistics, there is sufficient stock of fertilizers in the country, which will act as a protective shield in times of crisis. As of Friday, the total fertilizer stock has increased by 36.5 percent to 17.7 million tonnes, which was about 13 MT at the same time last year. According to FAI, the stock of DAP and NPK is 70-80 percent more than last year. Till the end of February, the agencies have imported 9.8 MT of fertilizer, while additional import of 1.7 MT has been decided for the next three months. The Department of Fertilizers has clarified that the import sources of phosphatic fertilizers have been diversified, so that farmers do not have to face shortage of fertilizers due to international logistics problems.

Challenges of non-priority industries

Experts are of the opinion that fertilizer is the top priority of the government, hence there will be no huge cut in it. But non-priority sectors will have to make do with less gas supply. These industries will have to immediately arrange for alternative fuels for their energy needs.

Search for new LNG sources and obstacles

India obtains 60 percent of its total LNG requirement from sources other than West Asia. Now the government and companies are trying to ensure additional supply from countries like Australia and Canada to fulfill the remaining share.

There are two main challenges in this:-

shipping: To arrange for special LNG tankers to transport the gas.

Capacity: Ensuring that new supplier countries have spare capacity to liquefy gas before loading it onto ships.

What is the main cause of the crisis?

60% of the LNG used to manufacture urea in India is imported from Qatar. Following the recent attack by Iran on Qatar’s QatarEnergy facility, Qatar has been forced to halt its production. For this reason there has been a major disruption in India’s supply chain.