City gas firms seek revival of pooled gas mechanism

City gas distribution companies have asked the government to restore the pooled gas mechanism, citing renewed supply and price uncertainty from tensions in West Asia. Two senior industry executives said the mechanism, introduced in March and withdrawn in July, had provided 7-8 million metric standard cubic meters per day of gas at about $11.60 per mmBtu to distributors, fertiliser makers and other industries.

Industry executives said the withdrawal has created a shortfall and increased sourcing uncertainty. Domestic administered pricing and new well gas cover only 40-50% of sourcing, the rest comes from long-term contracts and spot purchases. Companies are now seeking mid-term purchases to bridge supply gaps and plan longer-term contracts once conditions stabilise.

India, the world's fourth-largest LNG importer, sources over 40% of its LNG from Qatar. Qatar Energy declared force majeure on exports after missile attacks by Iran forced production halts at its Ras Laffan complex and shipping disruptions through the Strait of Hormuz. Mahanagar Gas Ltd said renewed US-Iran tensions have squeezed imported supply. To offset higher costs, CGD companies raised prices by about Rs 5 per kg since February. The ministry did not reply to queries.