LNG Import Dynamics in India Amid Strait of Hormuz Crisis
India effectively increased its Liquefied Natural Gas (LNG) imports from alternative regions unaffected by the Strait of Hormuz crisis, showing agility in managing energy resources. This strategic shift allowed the country to augment LNG import volumes during May-July, following a decline in March and April, caused by the West Asia war.
Impact of the Strait of Hormuz Crisis
- The effective closure of the Strait of Hormuz significantly reduced LNG imports from Qatar, India's largest supplier.
- India prioritized LNG supply over price, catering to demands from sectors such as city gas distribution (CGD), fertilizers, power, and ceramics.
Import Statistics and Sources
- India's LNG imports rose by 15.4% in May-July compared to the previous year, reaching 7.08 million tonnes.
- During March-April, imports had decreased by nearly 13% year-on-year.
- The major sources of LNG during this period were:
- United States: 2.19 million tonnes, a 252.8% increase year-on-year.
- Nigeria: 1.31 million tonnes, a 123.8% increase.
- Oman: 1.22 million tonnes, a 340.9% increase.
- Angola: 0.80 million tonnes, a 71.3% increase.
Challenges and Adaptations
- Despite disruption, India's LNG imports from the UAE recovered in June and July, although they were down 34.4% year-on-year.
- Qatar's imports fell by 91.3% to 0.23 million tonnes.
- The UAE used strategies like turning off LNG tankers’ transponders to avoid detection, showing higher risk-tolerance.
Market Resilience and Future Projections
- India's market showed resilience with July 2026 imports up by almost 16% year-on-year.
- The US and Oman were dominant suppliers, accounting for about 30% and 20% of total LNG supply, respectively.
- High demand from critical sectors like CGD and fertilizers sustained import levels, while power and ceramics sectors added demand due to weather and fuel supply constraints.
- LNG prices are expected to remain high, possibly reaching $19-20 per million British thermal units, affecting price-sensitive sectors like industry and power.
- India may need to compete with Europe and Northeast Asia for LNG, given the ongoing supply constraints caused by the Strait of Hormuz crisis.
Overall, India's strategic approach and diversified supply sources have helped mitigate the impact of the Strait of Hormuz crisis on LNG imports, but challenges remain with expected continued high prices and competition for available LNG supplies.
