The Union Government has invoked the provisions of the Essential Commodities Act, 1955, to regulate the production, supply, and distribution of natural gas in the country due to the disruption in the supply of energy from other parts of the world because of the ongoing conflict in West Asia.
The Ministry of Petroleum and Natural Gas has issued the Natural Gas (Supply Regulation) Order, 2026, which came into force on March 9. This decision has been taken due to the disruption in the supply of natural gas due to the disruption in the supply of liquefied natural gas that is being exported through the Strait of Hormuz due to the conflict between the United States, Israel, and Iran.
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According to government sources, the decision has been taken to ensure the supply of natural gas to critical sectors such as household gas supply, transport fuel, and fertilizer production.
Priority allocation framework for gas supply
Natural gas distribution under the new order will follow a four-tier priority system based on the average consumption of the previous six months.
Priority Sector I, which includes the following, will receive 100% of the previous average consumption, subject to availability.
Domestic piped natural gas (PNG)
Supply of compressed natural gas (CNG) used as a transport fuel
Production of LPG, along with operational requirements
Fuel required for compressors used in pipelines, along with operational requirements
Priority Sector II, which includes fertiliser plants, will receive 70% of the previous six months' consumption of gas, subject to certification that the gas so consumed is used only for the production of fertilisers.
Priority Sector III, including tea manufacturing and other industries connected to the national gas grid, will receive about 80% of their earlier average consumption.
Priority Sector IV, which covers industrial and commercial consumers supplied through city gas distribution networks, will also receive about 80% of their previous average supply.
Supply diversion from non-priority sectors
To meet the requirements of priority sectors, the government has allowed partial or full curtailment of gas supplies to certain industries.
Gas may be diverted from petrochemical units such as those operated by Reliance Industries Limited, Oil and Natural Gas Corporation, and other industrial consumers using high-pressure natural gas.
Power plants and refining companies may also be required to reduce consumption. Oil refiners have been directed to limit gas usage to about 65% of their average consumption over the past six months, depending on operational feasibility.
The order authorises GAIL, in coordination with the Petroleum Planning and Analysis Cell, to manage the diversion and redistribution of natural gas across sectors.
Order overrides existing gas contracts
The government clarified that the regulation will override existing gas sale agreements and commercial arrangements. Producers, marketers, pipeline operators and distribution companies must comply with revised supply schedules issued under the order.
Companies involved in gas production, imports or transportation, including ONGC, Reliance Industries and other operators — have been directed to immediately implement the order and report data on production, imports, stocks and consumption to the Petroleum Planning and Analysis Cell.
The notification also cited a ruling by the Supreme Court of India, which recognised natural gas and LNG as petroleum products that can be regulated under the Essential Commodities Act.
