What Happened
- India is actively scouting for alternative sources of Liquefied Natural Gas (LNG) and crude oil as the West Asia conflict escalates, with Australia and Canada stepping forward with offers to supply gas.
- Qatar — which supplies approximately 40% of India's annual LNG imports (~27 million tonnes/year) — halted LNG production after Iranian drone strikes damaged energy facilities at Ras Laffan Industrial City, the world's largest LNG processing hub.
- India currently imports 195 MMSCMD (million metric standard cubic metres per day) of gas, making it the world's fourth-largest LNG importer; Qatar and UAE together account for nearly 59% of India's LNG supply.
- Indian state-owned oil and gas firms are actively scouring spot LNG markets and long-term alternative suppliers, including the US, Australia, Russia, and Canada, to bridge the supply gap.
- The Strait of Hormuz — the critical maritime transit route through which approximately 54% of India's LNG and 50% of its crude oil imports flow — faces severe disruption from the ongoing conflict.
Static Topic Bridges
Strait of Hormuz: The World's Most Critical Energy Chokepoint
The Strait of Hormuz is a narrow waterway approximately 33–97 km wide at various points, located between Oman and Iran, connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. It is the world's single most important oil transit chokepoint: in 2024, approximately 20 million barrels per day of petroleum liquids — roughly 20% of global consumption — transited the strait. About one-fifth of global LNG trade also passes through it, primarily from Qatar.
- Located between Iran (north) and Oman/UAE (south); the only sea route out of the Persian Gulf
- Asian countries receive 89% of the crude oil transiting the strait; India is the second-largest destination at 14.7% of flows
- Only Saudi Arabia and UAE have partial bypass pipelines (Saudi East-West Pipeline: 5 mb/d; UAE Habshan-Fujairah: 1.5 mb/d)
- A closure or even partial disruption can cause immediate price spikes of 30–40% in global energy markets
Connection to this news: India's vulnerability is acute because 50% of its crude and 54% of its LNG are routed through the Strait of Hormuz, making alternative sourcing from Australia and Canada — which do not require Hormuz transit — strategically critical.
India's LNG Import Dependence and the Qatar Relationship
India is the world's fourth-largest LNG importer, with annual imports of approximately 36 billion cubic metres (bcm). Qatar is India's dominant supplier, accounting for about 40% of LNG imports under long-term contracts. In February 2024, India and Qatar signed a landmark 20-year agreement worth $78 billion for 7.5 million tonnes per year of LNG starting 2028. India's domestic gas production covers only a fraction of demand, and the IEA projects India will need to more than double LNG imports to ~64 bcm by 2030.
- India imports ~27 million tonnes/year of LNG; Qatar supplies ~11 MT/year under long-term contracts
- Petronet LNG is India's largest LNG importer and operates the Dahej and Kochi terminals
- City Gas Distribution (CGD) networks, fertiliser plants, and power generation are major consumers of imported LNG
- Qatar's halt has already led to 40% supply cuts to industrial consumers in India
Connection to this news: The Qatar LNG halt directly exposes India's over-concentration risk in a single supplier from a single geographic corridor, driving the urgent search for diversification to Australia (via Indian Ocean) and Canada (via Pacific routes).
Force Majeure in Energy Contracts
Force majeure (Latin: "superior force") is a standard clause in commercial contracts that excuses a party from fulfilling its contractual obligations when extraordinary events beyond its control — wars, natural disasters, government actions — make performance impossible. In LNG contracts, force majeure allows buyers (like Petronet LNG) or sellers to suspend deliveries without penalty during such disruptions.
- Petronet LNG invoked force majeure against QatarEnergy after Iranian strikes rendered safe navigation to Ras Laffan impossible
- GAIL's LNG allocation was subsequently reduced to zero from March 4, 2026
- Force majeure differs from contract termination — deliveries resume once the triggering event ends
- The cascade: QatarEnergy force majeure → Petronet → GAIL → downstream industrial consumers
Connection to this news: The force majeure invocations across the LNG supply chain are what triggered the urgent government-level search for alternative suppliers from Australia and Canada, as India must now find replacement cargoes on the spot market at significantly elevated prices.
Energy Security and the Principle of Supply Diversification
Energy security — defined as the uninterrupted availability of energy sources at an affordable price — is a core pillar of India's national security. The IEA's framework identifies diversification of supply sources, routes, and fuels as the primary hedge against geopolitical disruption. India has historically relied heavily on West Asia (Middle East) for both crude oil and gas, making it structurally vulnerable to regional conflicts.
- India imports ~85% of its crude oil and nearly all its LNG
- West Asia accounts for 40–50% of crude imports; post-Russia discount sourcing partially offset this
- Australia is among the world's top LNG exporters (mainly to Asian markets) and does not require Hormuz transit
- Canada's LNG export capacity (LNG Canada project at Kitimat, BC) is being developed to supply Asia directly via Pacific
- India's long-term energy security strategy under the National Gas Grid aims to raise natural gas share in the energy mix from ~6% to 15% by 2030
Connection to this news: Australia and Canada's offers represent exactly the kind of non-Hormuz, geographically diversified LNG supply India's energy security planners have long advocated, making this a pivotal moment for accelerating supply diversification.
Key Facts & Data
- India's total gas consumption: 195 MMSCMD; imports make up a significant share
- Qatar's share of India's LNG imports: ~40% (approximately 11 million tonnes/year)
- Qatar + UAE together: ~59% of India's LNG supply in 2025
- Strait of Hormuz daily oil flow: ~20 million barrels/day = ~20% of global petroleum consumption
- India's LNG imports: ~36 bcm/year (2024); IEA projects need for 64 bcm/year by 2030
- India-Qatar 20-year LNG deal (Feb 2024): $78 billion for 7.5 MT/year starting 2028
- Petronet LNG terminals: Dahej (Gujarat) and Kochi (Kerala)
- Asian LNG spot prices jumped ~40% on the day Qatar halted output
- Australia is among the world's top 3 LNG exporters; Canadian LNG Canada project (Kitimat) is being commissioned