Why LNG supply disruption due to West Asia war has pushed India to consider raising storage capacity

The West Asia conflict, specifically the Iranian attack on Qatar's Ras Laffan LNG facility in early March 2026, forced QatarEnergy to declare force majeure o...

What Happened

The West Asia conflict, specifically the Iranian attack on Qatar's Ras Laffan LNG facility in early March 2026, forced QatarEnergy to declare force majeure on LNG supply contracts, halting shipments that account for approximately 45% of India's total LNG imports.
With no cargoes arriving from Qatar since March 2, 2026, and disruption expected to persist for three to five years pending facility repairs (12.8 million tonnes per year of capacity sidelined), India faces a structural, not merely temporary, supply shock.
Petronet LNG — India's largest LNG importer — issued force majeure notices to its off-takers, including GAIL India, Indian Oil Corporation (IOC), and Bharat Petroleum Corporation (BPCL).
Asian spot LNG prices nearly doubled from approximately $10/MMBtu before the conflict to $24–25/MMBtu, making replacement spot purchases extremely expensive.
In response, India is now actively considering expanding LNG storage capacity to build buffer stocks that can absorb future supply shocks — a strategic shift from the current model of just-in-time regasification with minimal storage buffers.

Static Topic Bridges

LNG — What It Is and Why Storage Is Structurally Limited

Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4) cooled to approximately −162°C, at which point it becomes a liquid and occupies about 1/600th of its gaseous volume, enabling storage and transport in specialised cryogenic tankers. Unlike crude oil, LNG cannot be stored in ordinary tanks or underground caverns — it requires double-walled cryogenic tanks with nickel-steel inner linings and advanced insulation systems, making storage infrastructure significantly more expensive and technically demanding to build.

LNG is stored as a "boiling cryogen" — the liquid is maintained at its boiling point at near-atmospheric pressure; vapour that boils off (called "boil-off gas") must be re-liquefied or consumed.
India's current regasification infrastructure prioritises throughput over storage; existing storage tanks are sized primarily as operational buffers, not strategic reserves.
Petronet LNG operates India's two largest regasification terminals: Dahej (Gujarat) with a capacity of approximately 17.5 MMTPA (expandable), and Kochi (Kerala) with a capacity of 5 MMTPA.
A new greenfield terminal of 5 MMTPA capacity is being developed at Gopalpur, Odisha, expanding east-coast coverage.
Unlike crude oil, for which India has established a Strategic Petroleum Reserve (SPR), no equivalent LNG strategic reserve framework currently exists.

Connection to this news: India's inability to stockpile LNG in the way it can stockpile crude oil means the Ras Laffan disruption immediately translated into supply shortfalls rather than being absorbed by buffer stocks. This structural gap is the direct driver behind the storage expansion debate.

India's Energy Import Structure and Dependence

India is one of the world's largest energy importers. Natural gas accounts for approximately 6–7% of India's primary energy mix — well below the global average of around 23% — but its industrial and city gas distribution (CGD) applications make it a critical fuel for fertiliser production, power generation, and urban piped gas networks.

India imported approximately 24–27 million tonnes of LNG in 2024–25.
Qatar supplied approximately 10–11 MMTPA to India annually under long-term contracts, representing ~45% of total imports.
India is the world's second-largest consumer of LPG (liquefied petroleum gas), with 85–90% of LPG supplies also routed through the Strait of Hormuz.
The government's target is to raise natural gas's share of the primary energy mix to 15% by 2030, making import security more, not less, critical going forward.
The Petroleum and Natural Gas Regulatory Board (PNGRB) regulates the city gas distribution network; disruptions in LNG supply cascade into fertiliser plants (which use natural gas as feedstock), CNG vehicles, and PNG households.

Connection to this news: The Qatar supply disruption has exposed the fragility of India's gas supply architecture, which relies on long-term contracts with a geographically concentrated supplier base with no strategic reserves to fall back on.

Energy Security Policy Frameworks — India's Approach

India addresses energy security through multiple policy instruments: diversification of supply sources, development of domestic production, building of strategic reserves, and bilateral energy agreements. The Ministry of Petroleum and Natural Gas oversees energy policy, while entities such as GAIL, Petronet LNG, and IOC are the primary importers.

India's Strategic Petroleum Reserve (SPR) for crude oil is managed by Indian Strategic Petroleum Reserves Limited (ISPRL) across three underground facilities at Mangalore, Visakhapatnam, and Padur (Karnataka), with a total capacity of approximately 5 million tonnes (~36.9 million barrels), covering approximately 9.5 days of crude imports.
No equivalent SPR for LNG or natural gas exists; the current crisis has brought proposals for dedicated LNG strategic storage to the policy table.
India has signed long-term LNG supply deals with the US (Sabine Pass, Freeport), Australia, and Russia (Sakhalin-2) as part of supply diversification.
The India-UAE Comprehensive Economic Partnership Agreement (CEPA), signed in 2022, includes energy cooperation provisions that could be leveraged to replace some Qatar volumes.
Medium-term policy is also pushing for a transition from LPG to piped natural gas (PNG) through expanded pipeline networks, which would reduce the per-household vulnerability to import disruptions.

Connection to this news: The LNG storage expansion proposal represents a structural upgrade to India's energy security architecture — moving from a reactive, just-in-time model to a strategic buffer model, analogous to what India already does with crude oil.

Force Majeure in Energy Contracts

Force majeure is a contractual clause that excuses a party from performance obligations when an extraordinary, unforeseeable event beyond the party's control makes fulfilment impossible. In LNG contracts, force majeure events typically include natural disasters, wars, and critical infrastructure failures.

QatarEnergy invoked force majeure on March 4, 2026, following Iranian attacks on the Ras Laffan facility that destroyed approximately 17% of Qatar's LNG export capacity.
Force majeure in LNG contracts suspends delivery obligations for the duration of the qualifying event; it does not void the long-term contract itself.
Buyers affected by force majeure — such as Petronet LNG — typically need to turn to spot markets, which in this case were priced at a near-100% premium over pre-crisis levels.
The Ras Laffan repairs are estimated to take 3–5 years, meaning the force majeure period could persist well beyond a typical short-term disruption.

Connection to this news: The extended force majeure period from QatarEnergy is the proximate trigger for India's storage expansion reconsideration — the gap cannot be bridged through spot purchases alone at $24–25/MMBtu without severe cost escalation for industrial consumers.

Key Facts & Data

QatarEnergy force majeure declared: March 4, 2026 (following Ras Laffan attack on March 2)
Qatar's share of India's LNG imports: ~45% (~10–11 MMTPA out of ~24–27 MMTPA total)
Ras Laffan capacity sidelined: 12.8 MMTPA, repairs estimated 3–5 years
Spot LNG price spike: ~$10/MMBtu (pre-conflict) → $24–25/MMBtu (post-disruption)
Petronet LNG Dahej terminal capacity: ~17.5 MMTPA; Kochi terminal: 5 MMTPA
India LNG import dependence: ~50% of natural gas demand
India's target gas share in primary energy mix: 15% by 2030 (current: ~6–7%)
India's crude SPR: ~5 MT across Mangalore, Visakhapatnam, Padur — no equivalent LNG SPR
India is world's second-largest LPG consumer; 85–90% of LPG supply routed via Hormuz