When the United States and Israel launched an attack on Iran on February 28, few anticipated that the conflict would extend beyond ten days. The assassination of Iran's supreme leader, Ayatollah Khamenei, escalated a perilous war in the Gulf region.
The entire Middle East is presently engaged in conflict, with Israel and the USA launching attacks throughout Iran. In response, Iran is retaliating by dispatching missiles and drones to Gulf nations, aiming at both commercial hubs and US military bases located there.
Although the war is limited to three nations, its effects are resonating globally. In a tactical effort to strengthen its control over the situation, Iran has obstructed the vital Strait of Hormuz, the primary passage for oil and gas exports from Gulf countries like Saudi Arabia, Kuwait, Iran, Iraq, Qatar, and the United Arab Emirates (UAE).
India is also impacted by the shutdown of the Strait of Hormuz. The nation imports approximately 88% of its crude oil, 50% of its LNG, and 60% of its LPG, with the majority passing through this strait.
It is crucial to highlight that India's current focus is more on LPG supplies than on crude oil. This is because, although crude oil can be sourced from alternatives like Russia, finding replacements for LPG is more challenging and time-consuming, given that most alternative sources are situated in the United States and Canada.
Consequently, oil companies are focusing on providing gas to households, leading to delivery limitations for commercial users. To address the LPG demand, the government has implemented several significant actions, such as allocating an extra 48,000 kilolitres of kerosene to states, in addition to the usual monthly allocation of approximately 1 lakh kilolitres, to aid household cooking requirements.
Authorities overseeing environmental regulations have been instructed to permit hotels and restaurants to utilize alternative fuels like biomass, refuse-derived fuel (RDF) pellets, and coal for a duration of one month. Oil marketing firms will provide only 20 percent of the typical monthly commercial LPG demand to guarantee that essential businesses maintain their fuel supply. Furthermore, the minimum interval for LPG refills has been extended to 25 days in urban regions and 45 days in rural regions.
The return of kerosene and coal
During COP26, India pledged to reach net-zero carbon emissions by 2070. To accomplish this, the government has implemented several strategies, such as gradually eliminating kerosene and coal usage in Indian homes. Notably, the widespread distribution of LPG through free connections to the underprivileged under the Pradhan Mantri Ujjwala Yojana aimed to decrease the reliance on firewood and coal for cooking, particularly in rural areas.
Nevertheless, with LPG supplies strained because of the conflict, the government has temporarily reinstated the distribution of kerosene to provide households with an alternative cooking fuel.
It's a challenging scenario. However, the government is striving to maintain supply for domestic consumers. On the distribution front, no retail outlets have reported shortages, but there has been a significant rise in bookings due to panic. We encourage citizens to refrain from panic booking and emphasize the need to conserve fuel whenever possible,” stated Sujata Sharma, joint secretary of the Ministry of Petroleum and Natural Gas.
Although domestic LPG production has risen by 28 percent by channeling more refinery output to cooking gas, offering people an alternative option is also crucial.