- India, Pakistan, Bangladesh severely vulnerable
- Face high spot prices
As South Asia’s LNG market faces a major supply shock following the closure of the Strait of Hormuz by Iran, with regional demand expected to be 2–3 million tonnes (Mt) lower through Q3 2026, compared to pre-crisis projections, as countries struggle to replace disrupted Qatari supplies, some gas value chain experts posit that they foresee the region turning to Africa’s 58.6 billion cubic metres LNG to replace their severe LNG shortfall, and avert high LNG spot prices.
According to new analysis from Wood McKenzie that considers a scenario of two months’ supply disruption, QatarEnergy’s force majeure threatens around 20 percent of global LNG supply and creates severe supply pressure for South Asian importers.
India relies on Qatar for more than half of its LNG imports, while Pakistan sourced almost all of its 2025 LNG imports from Qatar. Bangladesh also depends heavily on Gulf suppliers, with Qatar and the UAE accounting for nearly three-quarters of its LNG imports last year.
Wood Mackenzie previously projected South Asia’s LNG demand would grow by 2.7 Mt (7%) in 2026, but a two-months closure of the Strait of Hormuz is likely to halt that expansion.
In addition, the supply shock has triggered widespread gas rationing across the South Asian economy. Petrobangla (Bangladeshi national oil company) has imposed four-hour daily gas supply cuts to CNG stations, reducing road transport demand, while textile and ready-made garment manufacturers face significant production curtailments.
“Energy-intensive sectors such as refining, petrochemicals, glass and ceramics are now facing gas shortages that could cut output as switching to oil it’s going to be equally challenging given India’s reliance on the Middle East for oil imports,” Akshay Gupta, research analyst, gas and LNG at Wood McKenzie, said.
LNG demand across South Asian markets is now likely to remain flat at best, analysts said. “While the region is highly dependent on LNG from the Middle East, South Asian buyers will find it hard to replace disrupted Qatari volumes due to increased competition for available spot LNG cargoes which has pushed LNG prices above US$20/mmBtu,” Gupta added.
However, African pipeline suppliers could come in handy to replace the South Asian severe LNG shortfall, following the current Strait of Hormuz closure due to ongoing Iran-Israeli-US war. Africa has total export supplies in excess of 58.6 billion cubic metres (bcm) of LNG around the world.
Of the total, 32.7bn cu metres were exported to Europe in 2021, according to available data ― Algeria sent 15.4bn cu metres and Nigeria 13bn cu metres ― accounting for 30 percent of the continent’s total LNG imports.
Gas value chain experts such as Friday Udoh have advised the South Asian major LNG buyers like India, Pakistan and Bangladesh, to look towards Africa’s LNG, currently in less-crisis production, to offset their threatened combined 36.2 Mt LNG supplies, due to Strait of Hormuz closure.
In particular, India sourced 59 percent of its 2025 LNG imports of 26 Mt from Qatar and the UAE. The Strait of Hormuz closure could curtail up to 1.45 Mt of LNG deliveries per month, but India might be looking to replace only 50 percent of the shortfall. Pakistan also imported almost all of its 2025 LNG supply of 6.6 Mt from Qatar, leaving the country highly vulnerable to supply disruptions. Pakistan had already cancelled 35 cargoes for deliveries in 2026 because of stagnant demand and increased domestic gas supply availability. Qatar and the UAE supplied 3.6 Mt, or 63 percent of Bangladesh’s LNG imports in 2025. The current disruption could result in only half of these volumes being replaced given high spot LNG prices.
The gas value chain experts advised the South Asian LNG buyers to queue behind the EU, to replace their LNG shortfall. Rather than compete at the surged spot LNG prices. In 2023, the European Union (EU), in a bid to rebalance its gas supply away from Russia, announced the launch of first tenders for joint gas purchases from African countries. This novel approach leveraged the bloc’s purchasing power to secure supplies at lower prices.
The EU’s joint gas purchases had brought new supplies from the US, the Middle East and Africa, including established African suppliers like Algeria, Egypt and Nigeria. Other emerging LNG exporters on the continent, such as Mozambique, Senegal and Tanzania, have also been benefitting from the shift.
For the South Asian LNG buyers, the lag in oil-indexed LNG pricing formulas means contract prices will rise later in the year. With most LNG contracts linked to oil prices on a three-month lag, import costs for South Asian buyers are expected to increase from June 2026 onwards, adding further pressure to regional energy bills, Wood McKenzie said.
