Govt invokes Essential Commodities Act to ensure natural gas supply, orders refineries to divert key streams

The central government on Tuesday invoked the Essential Commodities Act (EC Act) to ensure uninterrupted supply of domestic cooking gas amid the ongoing conflict in the Middle East that has disrupted the oil and gas supply.

According to the official order, the supply of natural gas to the certain sectors shall be treated as priority allocation and shall be maintained subject to operational availability to 100 per cent of their past six-month average gas consumption. These priority sectors include:

• Domestic Piped Natural Gas supply
• Compressed Natural Gas for transport
• LPG production including LPG shrinkage requirements
• Pipeline compressor fuel
• other essential pipeline operational requirements

Also read: What is Essential Commodities Act that India invoked amid Iran war


The Ministry of Petroleum & Natural Gas had earlier directed refineries and petrochemical units to maximise production of liquefied petroleum gas (LPG) and divert key hydrocarbon streams to the LPG pool.

"The Central Government has assessed that the ongoing conflict in the Middle East has resulted in the disruption of liquefied natural gas (LNG) shipments through the Strait of Hormuz and suppliers have invoked force majeure clause which would entail diversion of natural gas to the priority sectors," it noted.

The order further states that government shall ensure supply of natural gas to the fertilizer plants on 70 per cent of their past six-month average gas consumption, subject to operational availability. It has urged gas marketing entities to ensure that gas supply to tea industries, manufacturing and other industrial consumers supplied through the national gas grid is maintained at 80 per cent of their past six-month average gas consumption subject to operational availability.

Under the official order, all City Gas Distribution entities have been asked to ensure that industrial and commercial consumers supplied through their networks receive 80 per cent of their past six-month average gas consumption subject to operational availability.

The Centre has ordered oil refining companies to absorb the impact of LNG supply disruption to the extent feasible by reducing gas allocation to refineries to approximately 65 per cent of the past six-month gas consumption, subject to operational feasibility.

The government has directed every producer, importer, transporter, marketer or distributor of natural gas including LNG and regasified LNG to furnish information relating to production, imports, stocks, allocation, supply and consumption to the Central Government or to any officer authorised by it.

Also read: Restaurants raise concern about potential LPG cylinder shortage to Oil Minister Puri

What are Essential Commodities?

As per the Essential Commodities Act, 1955, government-recognised essential commodities include drugs; fertilizer, whether inorganic, organic or mixed; foodstuffs, including edible oilseeds and oils; hank yarn made wholly from cotton; petroleum and petroleum products, including natural gas and liquified natural gas; raw jute HI jute textiles; seeds of food-crops and seeds of fruits and vegetables along with seeds of cattle fodder; and jute seeds.

Which gas companies are impacted?

Under the order to invoke Essential Commodities Act, the government has directed all entities involved in production, import, marketing, transportation or supply of natural gas to comply with the order, including revision of supply schedules, diversion of supplies and sector-wise allocation of natural gas as directed by the Central Government in coordination with the GAIL.

(a) ONGC, RIL, OIL, Vedanta and other domestic natural gas producers

(b) GAIL and other gas marketing entities

(c) LNG terminal operators

(d) Natural gas pipeline operators

(e) City Gas Distribution entities

For fulfilling the gas requirement of the priority sectors, the government will impose full or partial curtailment of gas supplied in the following order of priority:

(a) petrochemical facilities not limited to ONGC Petrol additions Limited, GAIL Pata Petrochemical Complex, Reliance O2C and other High-Pressure High Temperature (HPHT) gas consumers.

(b) power plants as required.

Also read: India orders refineries to boost LPG production for domestic use

Govt direct oil refiners to boost LPG production

In view of the disruptions in the Strait of Hormuz, the Ministry of Petroleum and Natural Gas issued orders to oil refineries to increase LPG production and directed that such additional output be channelled specifically for domestic use.

The government has prioritised domestic LPG supply to households to ensure energy security for citizens amidst the ongoing uncertainty in the global oil and energy market due to West Asia crisis

"In light of current geopolitical disruptions to fuel supply and constraints on supply of LPG, Ministry has issued orders to oil refineries for higher LPG production and using such extra production for domestic LPG use," the Ministry of Petroleum and Natural Gas announced on X.

To manage the current supply constraints, the ministry introduced a 25-day inter-booking period for consumers to avoid hoarding and prevent black marketing.