Petronet LNG storage plan amid Qatar supply risk 2026

Why India is focusing on LNG storage

India is looking to expand liquefied natural gas (LNG) storage capacity as geopolitical risks rise and supply disruptions in West Asia expose vulnerabilities in the country’s energy supply chain. The push gained urgency after cargo flows from key suppliers such as Qatar and the UAE were affected following the start of the West Asia conflict. India imports about half of its natural gas requirement, and much of it arrives as LNG by ship. Natural gas is used across the economy, including power generation, fertiliser production, city gas for household kitchens, compressed natural gas (CNG) for vehicles, and as industrial feedstock. When shipments get delayed or halted, the impact quickly spreads to multiple consuming sectors.

The country’s dependence on imports makes storage an important buffer. Unlike routine operational inventory, emergency storage is meant to help maintain supplies when shipping lanes are disrupted or when suppliers temporarily stop deliveries. Petronet LNG, India’s largest LNG importer, has framed additional tankage as a practical way to keep domestic supplies stable during crises.

What triggered the latest supply concerns

Petronet LNG CEO A K Singh said supplies from Qatar and the UAE, which together accounted for about 40% of India’s LNG imports, have been affected since the West Asia conflict began. The disruption forced India to look for alternative sources at short notice. Singh also said LNG shipments from Qatar’s Ras Laffan facility were halted from March 2 after QatarEnergy declared force majeure amid the conflict. As per his comments, no cargoes arrived in March or April, May was expected to be affected, and June supplies were uncertain.

Petronet also flagged shipping constraints. Singh said one Petronet vessel, Disha, was loaded with LNG but got stranded after movement through the Strait of Hormuz was effectively halted following the conflict. Separately, reports in the provided material also said Iran struck two of Qatar’s 14 LNG production trains, prompting force majeure, and that repairs could sideline 12.8 million tonnes per year of LNG for three to five years. Singh said Petronet had not been receiving cargoes from the trains that were damaged.

Petronet’s tank expansion plan across terminals

At a media call to announce fourth-quarter and FY26 earnings, Singh said Petronet plans to expand storage by building new LNG tanks across multiple terminals. The plan includes:

• Two LNG tanks at Gopalpur in Odisha
• One additional LNG tank at Kochi in Kerala
• Additional storage at Dahej in Gujarat

Singh said these projects are expected to take about three years. In all, seven tanks were described as being “on the drawing board”. He also pointed to a parallel evaluation of optimal strategic LNG reserves at a national level, aimed at managing future crises.

How more tankage changes energy security math

Additional tankage increases the amount of LNG that can be stored domestically. Petronet’s argument is straightforward: stored LNG can be drawn down to maintain normal supply when imports are disrupted. Singh described Petronet’s current facilities as sufficient for day-to-day operational needs but not for emergencies “like war”, where disruptions can be sudden and prolonged.

The emphasis on synchronising “supply and drawal” signals that storage is not only about having capacity, but also about being able to time imports and withdrawals efficiently when markets are volatile or shipping is constrained.

Petronet’s current infrastructure footprint

Singh said Petronet has 10 out of India’s 23 LNG tanks and in 2025-26 handled 26.5 million tonnes of imported LNG. Petronet’s current terminal details cited include:

• Dahej import facility in Gujarat: eight tanks, 22.5 million tonnes per year capacity
• Kochi terminal in Kerala: two tanks, 5 million tonnes per year capacity

This installed base provides a buffer under normal conditions, but the company’s messaging suggests the scale of geopolitical risk is pushing it to treat storage as a strategic resilience tool rather than only an operational requirement.

Long-term contracts and what has been disrupted

Petronet has two long-term LNG import contracts mentioned in the material:

• 7.5 million tonnes per year with Qatar
• 1.42 million tonnes per year with ExxonMobil

Singh said Petronet historically received about 9-10 cargoes per month from Qatar. However, due to force majeure and shipping disruptions, none arrived in March and April, with May also expected to be similarly affected.

He added that the facilities in Qatar that supply India were undamaged and that full supplies are expected to resume once production restarts and the regional situation normalises. When asked about a timeline, he said resumption depends on normalisation and operations will restart once conditions improve.

Spot LNG prices spiked, then eased

Singh said the conflict led to a surge in spot LNG prices to about USD 24-25 per million British thermal unit during the disruption, before easing to around USD 16. He also underlined that demand in India remains highly price-sensitive, and that competitive pricing is important to sustain growth. The pricing spike matters because when long-term contracted volumes are disrupted, buyers often have to turn to spot cargoes to bridge gaps, which can sharply increase the delivered cost of gas.

Immediate impact on domestic supply priorities

Singh said the supply disruption led to cuts being imposed on several industrial users to protect supplies to priority sectors such as household kitchens and CNG for transport. Other portions of the provided material also described industrial curtailments ranging from 10% to 40%, while maintaining CNG flows.

This pattern reflects a standard prioritisation approach during gas shortages: city gas and essential retail segments are protected first, while industrial consumers absorb a larger share of cutbacks.

Procurement stance: watching prices, not rushing contracts

On whether Petronet would change its long-term procurement strategy after the West Asia conflict, Singh said the company is not advocating more long-term contracts “today” and will watch prices. He indicated that current planning relies on available capacity and expected future spot buying when prices soften, again emphasising India’s price sensitivity.

This stance highlights the tension between security of supply through long-term contracts and the flexibility of spot purchases, especially in a market where demand can weaken quickly when prices rise.

Key facts at a glance

What to watch next

Petronet expects full contracted supplies from Qatar once the Middle East situation stabilises, but near-term cargo uncertainty remains part of the company’s stated outlook. The company’s tank expansion plan is positioned as a multi-year response, with projects expected to take around three years.

The next milestones for investors and gas-consuming industries will be updates on the resumption of Qatar cargoes, any further force majeure notifications, and the pace at which Petronet moves from “tanks on the drawing board” to final investment decisions and execution at Gopalpur, Kochi, and Dahej.