Two molecules, two supply chains, one word: “gas”
When your auto-rickshaw driver fills up CNG, when your kitchen runs on a piped gas connection, and when your mother refills an LPG cylinder — all three are called “gas” in everyday conversation. They are not the same thing. They come from different places, travel through different infrastructure, and are vulnerable to completely different supply disruptions.
The Two “Gas” Supply Chains
| Natural Gas (Methane) | LPG | |
|---|---|---|
| Molecule | CH₄ — lightest hydrocarbon | Propane + Butane (C₃ + C₄) |
| Primary source | Gas wells + LNG imports | Oil refinery byproduct |
| Total India volume | 187 MMSCMD | 31.3 MMT/yr |
| Delivered as | CNG (compressed) or PNG (piped) | 14.2 kg steel cylinder |
| Who distributes | GAIL, IGL, MGL, Adani Total Gas | IOC, BPCL, HPCL |
| Supply chain | Natural gas — tracked separately | Inside the oil supply chain |
The practical implication of this distinction matters right now. With Hormuz disrupted and Qatar invoking force majeure, India’s CNG autos and PNG kitchens are under supply pressure. Your LPG cylinder is under completely separate pressure from Saudi and UAE LPG import routes — a different problem, a different supply chain.
Chain 1: Natural Gas (Methane, CH₄)
Total supply: 190.5 MMSCMD
Where It Comes From
India is nearly equally split: 52% comes from domestic production (99.5 MMSCMD) and 48% from LNG imports (91 MMSCMD).
Domestic production: 99.5 MMSCMD
The single most important fact about Indian domestic gas is that Reliance-BP’s KG-D6 deepwater block has generated roughly 90% of all incremental production since FY21. Without it, India’s domestic output would have been in sharp decline. KG-D6 now produces ~30 MMSCMD across its R-Cluster, Satellite Cluster and MJ field developments.
| Producer | Volume | Key assets | Trend |
|---|---|---|---|
| ONGC | 65 MMSCMD | Mumbai High, Bassein, Assam, Andhra Pradesh | ▼ Declining |
| Reliance / BP (KG-D6) | 30 MMSCMD | Deepwater Bay of Bengal | ▲ Plateau 2026 |
| Oil India Ltd | 3 MMSCMD | Assam, Arunachal Pradesh | → Flat |
| Others (CBM, Vedanta, GSPC) | 1.5 MMSCMD | Rajasthan, MP, West Bengal | → Flat |
The critical concern looking forward: KG-D6 plateaus in 2026. ONGC’s legacy fields keep ageing. Without major new deepwater development, domestic production falls to around 90 MMSCMD by 2030 — pushing India’s import dependence from 48% today to over 60%.
LNG imports: 91 MMSCMD
| Supplier | Volume | Share | Route | Status |
|---|---|---|---|---|
| 🇶🇦 Qatar (QatarEnergy) | 40 MMSCMD | 44% | Via Hormuz | ⚠ Force majeure invoked |
| 🇦🇪 UAE (ADNOC) | 18 MMSCMD | 20% | Via Hormuz | ⚠ Disrupted |
| 🇺🇸 USA (Sabine Pass + Cove Point) | 12 MMSCMD | 13% | Non-Hormuz | ✓ Safe |
| 🇷🇺 Russia (Sakhalin-2) | 7 MMSCMD | 8% | Pacific route | ~ Uncertain |
| Others (Oman, Angola, Australia, spot) | 14 MMSCMD | 15% | Mixed | Partial risk |
The most alarming structural fact: 69% of all LNG imports — 63 MMSCMD — transits the Strait of Hormuz. Unlike crude oil where Russia (37% of supply) provides a major non-Hormuz alternative, there is no Russia equivalent for LNG. Russian LNG is only 8% and partly sanctioned. India holds only days of LNG buffer, versus 90 days of crude oil in its strategic petroleum reserve. The gas supply chain is measurably more fragile than oil in the current disruption.
How LNG Becomes Pipeline Gas — Regasification
LNG arrives at ports as a liquid at -162°C. Before it can enter pipelines it must be warmed and regasified at terminals. India has eight of these with 47.7 MMTPA of capacity — but runs them at barely 49% utilisation overall.
| Terminal | Operator | Capacity | Utilisation | Hormuz exposure |
|---|---|---|---|---|
| Dahej (Gujarat) | Petronet LNG | 17.5 → 22.5 MMTPA | 95% 🟢 | 76% |
| Dabhol (Maharashtra) | GAIL India | 5.0 MMTPA | 42% 🟡 | 60% |
| Hazira (Gujarat) | Shell India | 5.2 MMTPA | 30% 🟡 | 70% |
| Dhamra (Odisha) | Adani Total Gas | 5.0 MMTPA | 27% 🔴 | 65% |
| Mundra (Gujarat) | GSPC / Adani | 5.0 MMTPA | 25% 🔴 | 88% |
| Kochi (Kerala) | Petronet LNG | 5.0 MMTPA | 21% 🔴 | 100% |
| Ennore (Tamil Nadu) | IOC / TIDCO | 5.0 MMTPA | 18% 🔴 | 62% |
| Chhara (Gujarat) | HPCL | 5.0 MMTPA | Ramping 🔴 | 80% |
Dahej does almost all the work. It sits at the head of the HVJ pipeline — India’s main gas highway — with direct connections to fertiliser plants, power stations and city gas networks across north and west India. East coast terminals (Ennore, Dhamra) sit commercially stranded because the Urja Ganga pipeline connecting them to industrial India hasn’t been fully built. They have the capacity. They just have nowhere to send the gas.
How It Travels — Pipelines and Last-Mile Distribution
From terminals and domestic fields, gas moves through 24,000+ km of trunk pipelines dominated by GAIL India (~14,500 km). The HVJ pipeline — Hazira to Vijaipur to Jagdishpur — is the main artery, a 2,800 km spine running from the Gujarat coast through Madhya Pradesh to the Indo-Gangetic plain.
The last mile is City Gas Distribution (CGD) — 307 authorised zones across India operated by IGL (Delhi NCR), MGL (Mumbai), Gujarat Gas (Surat, Morbi, Vadodara), Adani Total Gas (32 zones), GAIL Gas, Torrent Gas and others.
At the CGD company level, CNG and PNG draw from the same gas pool. The company buys pipeline gas from GAIL and either:
- Compresses it to 200 bar for vehicle tanks → this is CNG
- Distributes it at 21 mbar through underground pipes to homes → this is PNG
Same molecule. Completely different last mile.
Who Consumes the Gas — 187 MMSCMD
| Sector | Volume | Share | Key detail |
|---|---|---|---|
| 🌾 Fertiliser (urea/ammonia) | 58 MMSCMD | 31% | Gas → NH₃ → urea. Cannot switch to another fuel. Food security anchor. |
| 🏗️ Industry (steel, ceramics, glass, tea) | 45 MMSCMD | 24% | Morbi ceramics alone ~5 MMSCMD. Switches to coal above ~$10/MMBTU. |
| 🏙️ City Gas (CNG + PNG combined) | 37 MMSCMD | 20% | Growing at 7% CAGR. Will overtake fertiliser as #1 sector by 2028. |
| ⚡ Power generation | 25 MMSCMD | 13% | Only 22–25% plant load factor. Gas power (₹5–7/unit) can’t compete with coal (₹2–3) or solar (₹2.5). |
| 🏭 Refineries and petrochemicals | 22 MMSCMD | 12% | Hydrogen production, process heat. Growing fast — up 70% YoY in FY24. |
The pricing divide that explains everything: Fertiliser plants and allocated power stations get domestic gas at the government-subsidised APM ceiling of ~$6.5/MMBTU. Everyone else pays $10–18/MMBTU for LNG. This two-tier market is why gas sits at only 6.7% of India’s energy mix versus the 24% global average — industrial buyers simply switch to coal the moment LNG exceeds ~$10/MMBTU.
Crisis priority order (Gas Regulation Order 2026 — currently active):
- PNG homes + CNG transport + LPG production → 100% supply
- Fertiliser plants → 70% supply
- Industry (ceramics, steel, glass) → 80% supply
- Power plants → Cut first, switch to coal
Exports — Effectively Zero
India exports no meaningful volumes of natural gas. Unlike crude oil — where India imports, refines and re-exports $85B+ of products — there is no gas re-export arbitrage. You cannot economically regas LNG, then re-liquefy and re-export it. India consumes every molecule it produces and imports.
Chain 2: LPG (Propane + Butane)
Total consumption: 31.3 MMT/yr across 330 million+ households
LPG vs CNG vs PNG — the differences that matter
| Parameter | LPG | CNG | PNG |
|---|---|---|---|
| Molecule | Propane + Butane (heavy) | Methane (light) | Methane — identical to CNG |
| Source | Oil refinery + gas processing | Natural gas pipeline | Same as CNG |
| State | Liquid in cylinder @ 8–10 bar | Gas @ 200–250 bar | Gas @ 21 mbar |
| Leak behaviour | Sinks — accumulates at floor | Rises — disperses safely | Rises — disperses safely |
| Cost per 1,000 kcal | ~₹6.5–7 | ~₹9–10 | ~₹4–5 (cheapest) |
| Distribution | Steel cylinder via truck | Pipeline → compressor → tank | Pipeline to home meter |
| Users in India | 330M+ households | 8M+ vehicles | 13M homes |
| Supply chain | Oil supply chain | Natural gas chain | Natural gas chain |
Where LPG comes from
About 65% of India’s LPG comes from oil refinery distillation. Every refinery — Jamnagar, Paradip, Mumbai, Kochi, Mathura — produces LPG as a mandatory light fraction whether it wants to or not. IOC, BPCL, HPCL and Reliance are all major LPG producers purely by virtue of being major refiners.
The remaining 35% comes from natural gas processing. Raw wellhead gas contains not just methane but heavier C₃ and C₄ molecules. At fractionation plants like ONGC’s Hazira and GAIL’s Pata, these heavier molecules are separated from the methane stream and sold as LPG. This is the one overlap point between the two supply chains: the same gas well that produces methane for your CNG auto also produces propane and butane that fill your cooking cylinder.
India imports an additional 4–5 MT/year of LPG primarily from Saudi Aramco, UAE and the USA to bridge the supply gap.
The transition underway
PNG is cheaper (₹4–5 per 1,000 kcal versus ₹6.5–7 for LPG), safer (no pressurised liquid cylinder in the kitchen), and eliminates subsidy leakage through fake connections. The government’s target of 120 million PNG connections by 2030 — from 13 million today — is essentially a plan to retire India’s largest cylinder distribution operation, which involves 22,000 distributors and millions of truck deliveries every month.
The Current Crisis — Hormuz (March 2026)
Both supply chains are simultaneously under stress. Qatar’s Ras Laffan facility — source of 44% of India’s LNG — has invoked force majeure following US-Israeli strikes on Iran. The Strait of Hormuz is functionally blocked, threatening 69% of LNG imports and a portion of LPG imports from Saudi Arabia and UAE.
The gas crisis is structurally harder to manage than an oil supply disruption for three reasons. First, India has no meaningful LNG storage buffer — days of supply versus crude oil’s 90-day strategic reserve. Second, there is no overland alternative supply route for LNG the way there is for crude. Third, no domestic production surge is possible — wells produce what they produce. India’s only lever is demand rationing, which is already underway under the Gas Regulation Order 2026.
The 2030 Ambition — How Far India Has to Go
The government target of raising gas from 6.7% to 15% of the energy mix requires consumption to nearly triple from 187 MMSCMD to ~500 MMSCMD by 2030.
| Metric | FY25 actual | 2030 target | Progress |
|---|---|---|---|
| Total gas consumption | 187 MMSCMD | 500 MMSCMD | 37% of the way |
| Domestic production | 99.5 MMSCMD | ~120 MMSCMD | 83% — feasible |
| LNG imports needed | 91 MMSCMD | ~380 MMSCMD | 24% — needs to 4x |
| Regasification capacity | 47.7 MMTPA | ~87 MMTPA | 55% — feasible |
| PNG home connections | 13 million | 120 million | 11% — biggest gap |
| CNG stations | 6,861 | 17,500+ | 39% — on track |
| Gas in energy mix | 6.7% | 15% | 45% of the way |
The infrastructure is buildable. The economics are harder. As long as LNG costs $12–18/MMBTU and coal costs the equivalent of $3–4/MMBTU, industrial buyers will keep choosing coal unless forced otherwise. CNG and PNG for households and vehicles will grow regardless — driven by air quality regulation, consumer preference and lower cost. Fertiliser will remain a gas consumer by necessity. But power plants and heavy industry — which must together absorb the bulk of incremental gas to hit 15% — won’t shift without carbon pricing or supply mandates that don’t yet exist.
Six Things to Remember
LPG is an oil derivative, not natural gas. When Hormuz is blocked, your CNG auto and PNG kitchen are at risk. Your LPG cylinder is under a separate supply pressure from Saudi Arabia — a different problem on a different supply chain.
CNG and PNG are the same molecule. IGL in Delhi buys pipeline gas from GAIL and either compresses it for vehicles or pipes it to your home. The only difference is the last metre of delivery.
Gas is more Hormuz-exposed than crude oil. Crude has Russia (37%) as a non-Hormuz backup. LNG has no equivalent. India holds days of LNG buffer versus 90 days of crude reserves.
Fertiliser = gas = food security. Gas becomes ammonia becomes urea. You cannot switch a urea plant to solar. A gas supply cut is simultaneously an energy crisis and an agricultural one.
India has idle terminals and missing pipes. 47.7 MMTPA of regas capacity running at 49% is not a supply problem — it’s a pipeline problem. East coast terminals can’t move gas inland because the connections haven’t been built.
PNG is the endgame for Indian households. The cheapest cooking fuel, the safest delivery method, no cylinders, no subsidy leakage. Going from 13 million to 120 million PNG connections is India’s plan to retire the world’s largest cylinder distribution operation — pipe by pipe.
All natural gas volumes in MMSCMD (million metric standard cubic metres per day). LPG in MMT. 1 MMSCMD ≈ 0.035 bcfd. APM = Administered Pricing Mechanism.
