Centre Invokes Essential Commodities Act To Regulate Petroleum And Natural Gas Supply Amid West Asia Conflict
The Government of India has invoked the Essential Commodities Act, 1955, to regulate the availability, supply and equitable distribution of petroleum products and natural gas across the country.
The Ministry of Petroleum and Natural Gas notified the Natural Gas (Supply Regulation) Order, 2026, on 9th March following disruptions in global supplies caused by the ongoing conflict between the US-Israel and Iran in West Asia.
The order establishes a four-tier priority framework for natural gas allocation to ensure continued availability for critical sectors.
Priority Sector I covers domestic piped natural gas supply, compressed natural gas for transport, LPG production and pipeline operational requirements, which will receive 100 per cent of their average consumption from the previous six months.
Fertiliser plants under Priority Sector II will receive 70 per cent, whilst tea industries, manufacturing and other industrial consumers connected to the national grid will receive 80 per cent of their past consumption levels.
Oil refining companies have been directed to maximise LPG production using available propane and butane streams, with refiners prohibited from diverting these components for petrochemical manufacturing.
The directive requires the entire output of C3 and C4 streams to be supplied exclusively to the three state-run oil marketing companies—Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation which must distribute the fuel solely to domestic households.
The conflict has affected liquefied natural gas shipments through the Strait of Hormuz, with suppliers invoking force majeure clauses. India imports more than 60 per cent of its LPG requirements, with a significant share originating from the Middle East.
The government extended the minimum waiting period for booking domestic LPG cylinder refills from 21 days to 25 days to prevent hoarding.
Parliament was informed that India currently maintains storage capacity for crude oil and petroleum products for 74 days, which can help manage disruptions during geopolitical conflicts.
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