India avoids city-gas cuts as Hormuz crisis strains South Asian LNG supplies
India kept its city gas distribution running by shifting cuts to industry, while the Hormuz shutdown pushed up LNG prices across South Asia.
A disruption in the Strait of Hormuz and limited Qatari and UAE LNG flows reversed a projected 2.7 million-tonne growth in South Asian demand, forcing governments to ration gas and seek costly alternatives, according to Wood Mackenzie. India mitigated the shock by applying a tiered demand-management strategy that left city gas distribution untouched while trimming supplies to fertiliser, refinery and industrial users in March and April, supported by subsidies that lifted daily urea output by 12,000-15,000 tonnes.
Despite these measures, LNG tender prices rose from roughly $16.8-$18.8 per mmBtu to $26.4 per mmBtu by September, though demand for tenders stayed strong. Pakistan saw its monthly LNG imports fall by up to 0.4 million tonnes, prompting demand cuts, fuel switching and the release of domestic gas, while still bearing take-or-pay FSRU charges. Bangladesh struggled to replace lost cargoes, buying spot LNG at $23-$28 per mmBtu and paying over $18 per mmBtu on average, straining subsidies. The consultancy warns that such rationing merely postpones costs and that prolonged disruptions could force governments to choose between energy security, consumer protection and fiscal stability.
Why it matters
The crisis reveals South Asia's reliance on narrow LNG routes and the fiscal pressure of high energy prices on governments and consumers.
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