The suspension comes after the implementation of the Natural Gas (Supply Regulation) Order, 2026, which allows the government to override commercial gas contracts to ensure supplies for essential sectors such as residential piped gas and CNG for transportation. The policy was introduced after supply disruptions through the Strait of Hormuz prompted Petronet LNG to issue force majeure notices to domestic buyers.
Under the new allocation system, petrochemical plants are placed at the lowest priority level, meaning they will receive no gas supply until global availability improves. As a result, GAIL’s Pata facility—responsible for roughly 15–20% of India’s HDPE and LLDPE supply—has been forced to stop production.
While the shutdown is tightening availability of HDPE and LLDPE, LDPE supply remains unaffected, as the Pata complex produces only HDPE and LLDPE. However, the broader polyethylene shortage could still push LDPE prices higher due to stronger market sentiment.
The disruption comes at a time when regional inventories are already under pressure. GAIL has been unable to access its regular 15.5 million tons/year LNG supply, leaving the Pata complex without its main feedstock and forcing the shutdown of gas crackers.
Market analysts note that even if GAIL attempts to secure LNG from the spot market, sharply rising Asian LNG prices, combined with ongoing maritime disruptions, could make production costs unviable in the near term.
The duration of the supply shortage will largely depend on developments in the Middle East. Until gas supply restrictions are eased or LNG shipments through the Gulf resume normally, India’s PE market is expected to remain tight, with buyers increasingly turning to imports to cover the gap.
The absence of domestic volumes from a major state-run producer like GAIL is likely to keep HDPE and LLDPE prices firm in the spot market in the coming weeks.
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