Gas Glitches: West Asia Turmoil Casts Shadow on India's City Gas Sector

The Indian City Gas Distribution industry braces for disruptions as tensions in West Asia tighten gas supplies. Daily sales volumes could dip by 8-10%, particularly hitting Industrial and Commercial segments reliant on LNG imports. Alternative sourcing and government support offer a mixed but cautious outlook on profitability and resilience.

Ongoing disruptions in West Asia are poised to cast a shadow over India's City Gas Distribution (CGD) industry. With natural gas supplies under pressure, daily sales volumes are forecasted to drop by 8-10%, according to a recent press release by Crisil Ratings.

The Industrial and Commercial (I&C) segment, heavily reliant on imported liquefied natural gas (LNG), will likely bear the brunt of this volatility. In contrast, sectors like compressed natural gas (CNG) and domestic piped natural gas (PNG), comprising approximately 70% of industry volumes, are better shielded.

Particularly worrying is the halt of LNG imports from Qatar, a country responsible for almost 45% of India's LNG imports. This has prompted Indian gas traders to explore alternative sources amid a challenging market environment of limited supply excess and rising spot prices. The situation underscores the fragility of the sector as industry players navigate not only supply bottlenecks but also dynamics in pricing and credit resilience.

(With inputs from agencies.)