India Plans to Build Strategic LNG Buffers as Middle East Conflict Disrupts Qatari Supply

India is considering an increase in Liquefied Natural Gas (LNG) storage capacity after recent supply disruptions from West Asia affected import availability, as per the PTI reports. 

The interruptions linked to the regional conflict have highlighted gaps in the country’s ability to manage extended supply shocks. 

Petronet LNG Ltd said additional storage is being planned as existing capacity is suited to operational needs but offers limited support during prolonged disruptions. 

Supply Halt from Key Exporter 

Shipments from Qatar’s Ras Laffan facility have remained suspended since early March following a force majeure declaration. No cargoes were received in March and April, while May deliveries are expected to remain affected, and June supply remains uncertain. 

Petronet typically received around 9-10 cargoes per month from Qatar. During the disruption, 1 LNG vessel was delayed as shipping movement through the Strait of Hormuz was impacted. 

Proposed Capacity Additions 

The company has outlined plans to add 7 LNG storage tanks across its network. This includes 2 tanks at Gopalpur in Odisha, 1 at Kochi in Kerala, and further expansion at the Dahej terminal in Gujarat. 

The projects are expected to take about 3 years to complete. The additional tanks are intended to provide a buffer to maintain supply during interruptions. 

Existing Infrastructure and Throughput 

Petronet operates 10 out of India’s 23 LNG storage tanks. The Dahej terminal has 8 tanks with a capacity of 22.5 million tonnes per year, while Kochi has 2 tanks with 5 million tonnes annual capacity. 

In 2025-26, the company handled about 26.5 million tonnes of LNG imports. Current storage is sufficient for routine handling but not for extended supply disruptions. 

Import Dependence and Price Movement 

India imports nearly half of its natural gas requirements, which are used across power generation, fertiliser production, transport and households. Qatar and the UAE account for about 40% of total LNG imports. 

During the disruption, spot LNG prices rose to around $24-25 per million British thermal units before easing to about $16. Some industrial consumption was reduced to prioritise essential supply. 

Read More: RBI Penalises 2 Co-operative Banks Over Compliance Failures! 

Conclusion 

The recent disruption has underscored the limits of existing LNG storage capacity. Planned additions are for improving the ability to manage supply interruptions and maintain continuity in key sectors. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   
 
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.