New Delhi: India is allowing the use of dirtier fuels, such as kerosene, fuel oil and biomass, that it once sought to replace with Liquqfied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG), to ease pressure on LPG supplies disrupted by the conflict in West Asia. “Alternate fuel options are being activated to ease pressure on LPG and gas channels. Kerosene is being made available through retail outlets and PDS channels, and fuel oil is being made available for industrial and commercial consumers,” , Minister for Petroleum and Natural Gas Hardeep Singh Puri told Parliament on Thursday.
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The Ministry of Environment, Forest and Climate Change (MoEFCC) has also advised State Pollution Control Boards to allow hospitality establishments to temporarily switch to more polluting fuels. “The MoEFCC has advised State Pollution Control Boards to permit, for the duration of this crisis period, the use of biomass, RDF pellets, and Kerosene/coal as alternate fuels for the hospitality and restaurant segment for 1 month, which would enable a wider range of establishments to switch and free up LPG for priority consumers,” Puri said.
The move marks a temporary shift towards fuels that the government has previously sought to phase out and replace with gas to curb air pollution. The switch has been precipitated by a blockage imposed on the Strait of Hormuz by Iran. Around 50 percent of India’s crude oil, 54 percent of LNG imports, and 80 percent of LPG imports are routed through the Strait of Hormuz.
While the blockade affects all these sources of energy that India relies on, the impact on LPG and LNG segments is more acute as India lacks strategic stockpiles of comparable scale for these fuels. The shortage has already led to rationing of natural gas and LPG supplies within the country. The Centre has said that it will prioritise domestic consumers of LPG and Compressed Natural Gas (CNG) consumers over commercial consumers, like restuarants and hospitality sector, and industrial consumers, like fertilizers, refineries and power plants.
With rationing measures in place, as news of restaurants halting operations due to a dearth of commercial LPG cylinders flooded social media platforms, the government set up a three-member committe comprising of Executive Directors (ED) from Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) to look into the challenges being faced by them.
In a first, Puri told the Parliament in his statement that the government will now be allocating 20 percent of the average monthly commercial LPG requirement of restaurants. “In a major decision, 20 percent of the average monthly Commercial LPG requirement will be allocated from today by OMCs, in coordination with the State Governments so that there is no hoarding or black marketing,” Puri said.
Commercial LPG is sold in a deregulated market where any buyer can purchase cylinders without booking requirements or delivery authentication, the minister said, adding that unrestricted sales during a supply crunch could lead to diversion and speculative stocking.
Puri said India previously imported around 60 percent of its LPG requirements from Gulf countries including Qatar, the UAE, Saudi Arabia and Kuwait. India has now begun diversifying procurement to other suppliers.
“Procurement has now been actively diversified, with cargoes being secured from the United States, Norway, Canada, Algeria, and Russia, in addition to available Gulf sources,” the minister said.
He added that LPG production has been increased through refinery directives. “Hence, in the last 5 days, LPG production has been increased by 28 percent through refinery directives, and further procurement is actively underway,” Puri said. Despite the disruption, the government said domestic LPG supply for households, hospitals and educational institutions remains fully protected.
Apprising the House of the situation in the natural gas segment, the minister said, "Natural gas supply has been managed through prioritised allocation, and the position is stable well beyond immediate need. India produces approximately 90 MMSCMD of natural gas domestically. A further 30 MMSCMD was previously imported through Gulf sources now affected by the force majeure declaration from a major Qatari processing facility."
"I am pleased to inform the House that the shortfall has been substantially offset through alternative procurement. Large LNG cargoes are arriving on an almost daily basis through alternative supply routes, and India has sufficient gas production and supply arrangements to sustain this position even in the event of a prolonged conflict. Power generation for every household and for industry is fully protected," Puri added.
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Commenting on crude oil, the minister assured Parliament of ample availability with cargoes secured from non-Hormuz regions. "India's crude supply position is secure, and volumes secured exceed what Hormuz would have delivered. Before this crisis, approximately 45 percent of India's crude imports transited the Hormuz route. Thanks to Hon’ble PM’s outstanding diplomatic outreach and goodwill, India has secured crude volumes that exceed what the disrupted Strait route would have delivered in the same period. Non-Hormuz sourcing has risen to approximately 70 per cent of crude imports, up from 55 per cent before the conflict began," he said.
