New Delhi: The central government has issued a new order to regulate natural gas production and distribution across India following disruptions in Liquefied Natural Gas (LNG) shipments caused by the ongoing conflict in the Middle East. The move is aimed at ensuring equitable supply to priority sectors during the shortage.
Under the Natural Gas (Supply Regulation) Order, 2026, released by the Ministry of Petroleum and Natural Gas, the government has outlined a priority allocation framework for essential sectors, citing interruptions in LNG transport through the Strait of Hormuz and force majeure invoked by several suppliers.
The order, issued under Section 3 of the Essential Commodities Act, 1955, identifies four priority sectors:
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Priority Sector I: Domestic piped natural gas (PNG), compressed natural gas (CNG) for transport, LPG production (including shrinkage requirements), and pipeline operational needs will receive 100% of their average gas consumption over the past six months, subject to operational feasibility.
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Priority Sector II: Fertiliser plants will be allocated at least 70% of their average gas usage over the last six months, strictly for fertiliser production. Units will need to certify usage to the Petroleum Planning and Analysis Cell (PPAC) through the Ministry of Fertilisers.
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Priority Sector III: Industrial consumers, including tea manufacturers connected to the national gas grid, will receive roughly 80% of average past consumption, depending on supply availability.
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Priority Sector IV: Industrial and commercial consumers served via City Gas Distribution (CGD) networks will also receive about 80% of prior consumption, subject to operational constraints.
To maintain supply for these sectors, non-priority consumers will face curtailments. Petrochemical units, including ONGC Petro Additions, GAIL’s Pata complex, and Reliance O2C facilities, are expected to reduce consumption first. Oil refineries may have to cut gas usage to approximately 65% of average consumption. Power plants could face reductions if shortages persist.
The implementation will be overseen by Gas Authority of India Limited (GAIL), in coordination with PPAC, which will determine pooled gas prices for redirected supplies. Recipients of diverted gas must accept the pooled price and are prohibited from reselling it.
The order mandates all stakeholders involved in natural gas production, imports, marketing, and transportation—including ONGC, Reliance Industries, Oil India Limited, Vedanta, LNG terminals, pipeline operators, and CGD entities—to comply immediately. It also states that the provisions will override existing Gas Sale Agreements in case of conflict.
All entities must submit detailed reports on production, imports, stocks, allocation, supply, and consumption to PPAC, designated as the central nodal agency. The order has come into force following its publication in the Official Gazette, signalling the government’s efforts to manage gas distribution during a period of global supply uncertainty.
