Site icon SCC Times

India Notifies Natural Gas (Supply Regulation) Order, 2026 Amid Middle East Conflict

Shubhi
Natural Gas (Supply Regulation) Order

On 9 March 2026, the Ministry of Petroleum and Natural Gas (MoPNG) has notified the Natural Gas (Supply Regulation) Order, 2026.

Background:

Due to the shifting geopolitical situation and the ongoing conflict across major parts of the Middle East, liquefied natural gas (LNG) shipments have been severely disrupted. LNG traffic through the Strait of Hormuz has been impacted, and suppliers have invoked the force majeure clause, requiring the reallocation of available natural gas supplies to priority sectors.

Because LNG falls under the category of petroleum and petroleum products, it is regulated under the Essential Commodities Act, 1955. The Ministry also notes that natural gas is a critical input for sectors such as domestic PNG, CNG transport, fertilizer production, LPG production, and various industrial activities.

In response to these disruptions, the Government has notified this Order, effective from 9 March 2026, as a necessary regulatory measure to ensure stable and equitable distribution of natural gas amid international supply constraints.

Key Points of Natural Gas (Supply Regulation) Order:

  1. To maintain natural gas supplies and ensure equitable distribution and availability, this Order classifies priority sectors and mandates the percentage for each sector, based on their average consumption over the past six month.

  2. Priority Sector I:

    • Domestic Piped Natural Gas

    • Compressed Natural Gas (CNG) for transport

    • LPG production (including shrinkage needs)

    • Pipeline compressor fuel and essential pipeline operations

    These sectors will receive 100% of their average consumption.

  3. Priority Sector II:

    • Fertilizer plants

    These facilities will be supplied 70% of their past six-month consumption and can use the gas only for fertilizer production, with mandatory certification to Petroleum Planning and Analysis Cell (PPAC).

  4. Priority Sector III:

    • Tea industry, manufacturing, and other industrial consumers connected to the national gas grid

    They will receive 80% of average consumption. Principles for this allocation will be formulated by PPAC and the Industry Committee.

  5. Priority Sector IV:

    • Industrial and commercial consumers supplied via City Gas Distribution (CGD) networks

    They will receive 80% of average consumption, with allocation principles again set by PPAC and industry bodies.

  6. To meet the supply for priorities, the Government will curtail (fully/partially) the gas supply in this order:

    • Petrochemical facilities (including ONGC Petro Additions Ltd., GAIL Pata Petrochemical Complex, Reliance O 2C, and other High-Pressure High Temperature gas consumers)

    • Power plants, as required

  7. Oil refineries are specifically required to absorb LNG supply disruptions by reducing their natural gas allocation to about 65% of past consumption.

  8. Gas Authority of India Limited (GAIL), in coordination with PPAC, will manage natural gas supplies and report prices of diverted gas volumes.

  9. The following steps will be taken:

    • PPAC will notify pooled prices for gas diverted from non-priority to priority sectors.

    • Priority sector entities will be required to accept the pooled price and cannot pursue litigation related to force majeure supply adjustments.

    • Diverted gas will not be resold by receiving entities.

  10. Para 4 states that, all entities involved in producing, importing, marketing, transporting, or supplying natural gas will comply immediately with revised supply schedules, diversions, and sector wise allocations mandated by the Government.

  11. The entities include:

    • ONGC, OIL, RIL, Vedanta, LNG terminal operators

    • GAIL

    • LNG terminal operators

    • Natural gas pipeline operators

    • City Gas Distribution companies

  12. The Order explicitly states that its provisions override any conflicting clauses in existing Gas Sale Agreements (GSAs) or commercial arrangements.

  13. Every producer, importer, transporter, marketer, or distributor of natural gas and regasified LNG will submit detailed data on:

    • production

    • imports

    • stock

    • allocation

    • supply

    • consumption

  14. The Ministry designates the PPAC as the nodal agency for receiving and managing all such data.

Exit mobile version