Adani Total Gas, Gujarat Gas And Other Gas Stocks Rally Up To 18% On Supply Shortage Concerns

Adani Total Gas, Gujarat Gas Share Price: Shares of gas distribution companies surged by as much as 18.6 per cent on March 11 on concerns over a supply crunch amid the ongoing war in Iran. The energy supply crunch has compelled these firms to raise the prices of liquefied petroleum gas (LPG) cylinders, an essential fuel widely used in households and commercial establishments across the country. Supply risks have also emerged for liquefied natural gas (LNG), which is widely used for power generation, industrial operations and city gas distribution.

The price hikes improved investor sentiment, as higher prices allow these companies to pass on rising costs to consumers and protect their margins. Investors are expecting better earnings from these firms.

Adani Total Gas shares rallied up to 18.60 per cent, Gujarat Gas spiked as much as 12 per cent, and Indraprastha Gas surged up to 4 per cent during the session. Other gas stocks such as Mahanagar Gas, GAIL, Petronet LNG among other gas stocks also gained in early trade between 1 per cent and 2 per cent.

The US and Israeli war in Iran has disrupted energy supplies from West Asia, a region that plays an important role in the global oil and gas trade. India, which relies heavily on imports to meet its demand for cooking gas and natural gas, has already started to feel the pinch. Several hoteliers across the country have reported shortage in supply of commercial LPG cylinders over the past few days.

"At the moment, people have LPG cylinder stocks for 1-2 days. If they don't get supplies in 1-2 days, then these restaurants will have to shut down, and this is largely in cities like Bengaluru, Pune, and Mumbai," according to Sagar Daryani, president of the National Restaurant Association of India (NRAI), as told to PTI.

Supply Shortage Comes As Govt Prioritises Domestic LPG

The shortage of commercial LPG cylinders has come after the government decided to prioritise cooking gas supply to households.

To ensure that domestic users do not face disruption, the government has revised the priority order for the allocation of domestically produced natural gas. Under the new arrangement, LPG production has been placed at the top of the list. Compressed natural gas (CNG) used in vehicles and piped cooking gas supplied to households have also been given priority.

Because of this change, gas supply to commercial users such as restaurants, hotels and some industries has been reduced.

The government has also asked oil refineries to maximise LPG production to meet household demand. Reliance Industries said it is increasing LPG output from its Jamnagar refining complex. The company is also diverting natural gas from its KG-D6 fields to sectors that have been given priority by the government.

India Depends Heavily On Imports

According to data from the Petroleum Planning and Analysis Cell (PPAC), India imports around 60–65 per cent of its total LPG consumption. Of these, about 91–93 per cent of LPG imports come from West Asian suppliers such as UAE, Qatar, Saudi Arabia and Kuwait.

India also depends significantly on overseas supplies for natural gas. Liquefied natural gas (LNG) imports meet about 51 per cent of the country’s total natural gas consumption, highlighting the extent of India’s reliance on external sources. Of these LNG imports, around 66 per cent are sourced from Middle Eastern countries, primarily Qatar.

Globally, India is the fourth-largest importer of LNG, which is widely used for power generation, industrial operations and city gas distribution. The country is also the second-largest importer of LPG, a fuel that is commonly used for cooking in households as well as in commercial establishments such as restaurants and small businesses.