Qatar halts output: LNG firms tank 5-10% on supply concerns

Shares of liquefied natural gas (LNG) companies tumbled 5-10% on concerns over supply disruptions after Qatar, the largest exporter of gas to India, halted production amid the escalating West Asia crisis, reports Himadri Buch.

Shares of Mahanagar Gas (MGL) plunged 9.6%, while Petronet LNG dropped 9.5%, GAIL fell 6.3%, and Indraprastha Gas declined 5.75%, reflecting investor concerns over potential supply tightness and higher input costs.

“The current geo-political situation has led to abrupt disruption. It has been understood that we have reserves for 2-3 weeks (25 days),” said Siddarth Bhamre, head -Institutional Research, Asit C Mehta. “However, with political and warfare experts sighting this war to go on for ‘several weeks’, dwindling reserves daily will only increase the uncertainty.”

Qatar has stopped LNG production at its facility – one of the world’s largest – after it was targeted in an Iranian drone attack.

The sharp escalation in the conflict involving the US and Israel with Iran, alongside explicit Iranian threats to target vessels transiting the Strait of Hormuz (SoH), has effectively brought oil flows through this critical global energy chokepoint to a near standstill, according to Sumit Pokharna, VP – Fundamental Research, Kotak Securities.

The Strait accounts for approximately 20% of global petroleum consumption and LNG trade, making any disruption systemically significant for global energy markets, he said. Approximately 55% of India’s LNG imports are impacted, translating into a disruption of 28-29% of total domestic gas consumption.

“This is not a marginal disturbance; it is a material supply shock,” said Pokharna. Among listed entities, GAIL and Petronet LNG are likely to see curtailed volumes. City gas distribution (CGD) players may also face pressure as higher input costs and potential supply cuts could translate into price hikes and demand elasticity risks.

“We reiterate our cautious stance across the energy value chain. We maintain sell ratings on OMCs (IOC, BPCL, HPCL) as well as gas-linked names (GAIL, Petronet, Indraprastha and Mahanagar),” said Pokharna.

“In our view, this is not just a price spike; it is a supply disruption. Not just volatility, but structural vulnerability. Until visibility on flows through the Strait of Hormuz improves, risk-reward remains decisively skewed to the downside.” Technical indicators are flashing further downside in Mahanagar Gas and Indraprastha Gas.

“MGL has formed a large bearish candle on the daily chart with heavy selling volumes,” Chandan Taparia, head of technical and derivatives research at Motilal Oswal Financial Services. “The stock remains in an overall downtrend with support placed at `1,060 and `1,018.” Mahanagar shares closed at `1101 on BSE