Middle East Conflict Cuts India's Gas Supply

India's city gas distribution (CGD) sector is bracing for a potential 8-10% reduction in daily sales volumes. This anticipated decrease is a direct consequence of ongoing disruptions to natural gas supplies, predominantly affecting liquefied natural gas (LNG) imports. The conflict in West Asia has led to a doubling of global LNG rates, significantly impacting India's supply chain. QatarEnergy, a major LNG supplier to India, has declared force majeure, triggering a wider impact across gas traders. Consequently, industrial and commercial piped natural gas users, who rely heavily on imported gas and constitute 30% of sales, are expected to bear the brunt of supply curtailments. These users may face reductions of 40-50% in supply. Meanwhile, the compressed natural gas (CNG) for vehicles and piped natural gas for domestic households (PNG-D) segments, largely supplied by domestic gas, are expected to remain more stable. The government has also prioritized these segments under the Essential Commodities Act. Despite the challenges, CGD companies are expected to mitigate profitability impacts by passing on increased costs to end-consumers. Their strong balance sheets, liquidity buffers, and moderate leverage are anticipated to support credit profiles throughout this period of uncertainty. The duration of the Middle East conflict and global LNG price trends will be key factors determining the long-term impact.