India Plans ₹40,000 Crore Oman Gas Pipeline After Hormuz Shock

India’s petroleum ministry is directing GAIL, Engineers India, and Indian Oil Corporation to prepare a detailed feasibility report for a ₹40,000 crore ($4.7–4.8 billion) deep-sea gas pipeline from Oman to Gujarat, a project that would bypass the Strait of Hormuz entirely, a senior ministry official told the Economic Times on May 14, 2026. The pipeline would take five to seven years to build if cleared, making it the most consequential energy infrastructure decision India has made in a generation, born directly from a crisis that has already cost the country’s oil marketing companies ₹62,500 crore in under-recoveries between mid-March and end-April alone, a figure that has since climbed toward ₹1.98 lakh crore for the full first quarter of 2026, according to Petroleum Minister Hardeep Singh Puri.

Project Snapshot: India-Oman Subsea Gas Pipeline

Also Read: Hormuz Shock Threatens India’s Oil Supply — 1.7 Million Tonnes of Cargo Trapped in Shipping Freeze

What Actually Broke the Status Quo

This project is not new. The Oman-India subsea pipeline was first mooted in 1999. Engineers India participated in a feasibility study in June 1993, alongside Bechtel, Saipem, and McDermott, when Oman Oil Company formed a consortium to study a 1.8–2 billion cubic feet per day pipeline, per Oil & Gas Journal.

The route was surveyed, the seabed was mapped, and the cost, roughly $4–5 billion, never quite justified the investment. Every few years someone revived the idea. Nothing happened.

February 28, 2026 changed the calculation permanently. The United States and Israel launched coordinated airstrikes on Iran, codenamed Operation Epic Fury and Operation Roaring Lion respectively, targeting military installations, nuclear enrichment sites, ballistic missile production, naval assets, and IRGC headquarters, as confirmed by the U.S. Department of State and U.S. Congressional Research Service.

Iran retaliated with missile and drone strikes across seven countries within 48 hours, with the ISW/AEI Critical Threats Project documenting 95 Iranian strike waves by April 4 alone. On March 4, Iran formally closed the Strait of Hormuz using mine-laying, ship seizures, and IRGC Navy swarm boat activity.

Key Events: Hormuz Crisis Timeline and India’s Response

What followed was not theoretical. On March 1, the oil tanker Skylight was struck by a projectile north of Khasab, Oman, killing two Indian crew members and injuring three others. The MKD VYOM was struck by a drone boat, killing one Indian sailor and forcing evacuation of its 21-person crew.

On April 18, two Indian-flagged vessels, the VLCC Sanmar Herald, carrying nearly 2 million barrels of Iraqi crude, and the tanker Jag Arnav, came under direct fire from IRGC gunboats while attempting transit, forcing both to retreat westward, according to The Tribune India, citing maritime monitor TankerTrackers.

Audio intercepts from maritime channels captured the Sanmar Herald crew’s distress call: a direct rebuke to IRGC forces who had granted clearance and then opened fire. India summoned the Iranian ambassador in response. The Indian Navy deployed five-plus frontline warships under Operation Urja Suraksha, launched March 25, successfully escorting over 20 Indian-flagged cargo ships west of Hormuz.

The Scale of India’s Exposure

India imports roughly half its total natural gas as LNG, and 88% of its crude oil moved through Hormuz-dependent routes, per Republic World and Petroleum Minister Puri’s own public statements. The IEA is explicit: Bangladesh, India, and Pakistan collectively sourced almost two-thirds of their total LNG supplies via the Strait of Hormuz in 2025. There is no alternative routing for gas from Qatar, the IEA confirms LNG from Qatar physically cannot reach global markets except through Hormuz.

India’s Hormuz Dependency at a Glance

A full disruption would remove over 300 million cubic metres per day from global LNG supply, double what flowed through Nord Stream at peak, per IEA estimates. India has no strategic gas buffer. Strategic crude reserves cover roughly 9.5 days of consumption at full capacity and currently provide around 5 days of actual demand coverage.

New Delhi held retail fuel prices flat throughout the crisis, absorbing the shock fiscally rather than passing it to consumers. The cost has been severe. Oil marketing companies posted ₹62,500 crore in under-recoveries in the six-week window between mid-March and end-April.

By May 12, Petroleum Minister Puri told Business Standard that cumulative under-recoveries had climbed to nearly ₹1.98 lakh crore for Q1 2026, with the three OMCs—Indian Oil Corporation, BPCL, and HPCL, losing ₹1,600–1,700 crore every single day. Rating agency ICRA warned that if crude prices remain near $120–125 per barrel, LPG under-recoveries alone could touch ₹80,000 crore in FY27.

OMC Financial Damage: What the Crisis Is Costing India

The Pipeline — What the Ministry Has Actually Said

The petroleum ministry is directing GAIL, Engineers India, and Indian Oil Corp to prepare a detailed feasibility report. That report has not yet begun as of this writing. The cost estimate, ₹40,000 crore, or $4.7–4.8 billion, comes from the ministry official’s statement to the Economic Times on May 14. Construction timeline: five to seven years from clearance.

What stood out in the ministry’s framing is the China comparison. Officials acknowledged that India lags manufacturing rivals, specifically China, on gas infrastructure resilience. China operates over 90,000 km of natural gas pipelines versus India’s 16,848 km gas pipeline network operated by GAIL and affiliated entities, according to GAIL’s own published figures.

India’s gas share in the energy mix stands around 6%, versus China’s 9% and the global average above 23%. When Indian bureaucracies frame an infrastructure gap as a national competitiveness deficit, not merely a crisis response, projects move faster through approvals.

India vs China: Gas Infrastructure Gap

The old version of this pipeline died partly because its shallow-water routing crossed Pakistani continental shelf waters; Islamabad blocked it on security, economic, and strategic grounds, per the Institute of Peace and Conflict Studies.

The current design avoids this entirely, running through international deepwater exceeding 3,000 metres in places, through the Murray Ridge in the Arabian Sea.

Market Angle — Three PSUs in Play

GAIL is the most directly exposed name. In March 2026, after Petronet LNG issued force majeure and its QatarEnergy allocation dropped to zero, GAIL’s shares traded between ₹154.41 and ₹157.65 on March 5, volatile, reflecting investor concern about margin pressure and volume risk.

A confirmed feasibility mandate makes GAIL simultaneously a short-term risk story and a long-term beneficiary: it bears the supply disruption now and would operate the pipeline if built. GAIL controls over 70% of India’s gas transmission and marketing market share, per the company’s own published data.

PSU Exposure and Role in the Pipeline Project

Engineers India Limited was part of the original 1993 Oman pipeline consortium, Oil & Gas Journal records confirm Engineers India was hired by Oman Oil Company to evaluate the onshore segment in India and study Indian gas demand. Now it is being directed to participate again under a government mandate rather than a voluntary study.

Indian Oil Corporation completes the trio. IOCL and GAIL already executed long-term LNG supply agreements with ADNOC, UAE, securing approximately 2.7 million tonnes per annum, completed before the crisis, per the Ministry of Petroleum’s Year-End Review 2024. The Oman pipeline would be a structural fix layered on top of those term contracts, addressing the physical routing vulnerability rather than just the supply source.

The Private-Sector Parallel the Government Must Reckon With

South Asia Gas Enterprise (SAGE), a private consortium promoted by the New Delhi-based Siddho Mal Group in joint venture with a UK-based deepwater technology company, has been advancing a nearly identical project for years: the Middle East-India Deepwater Pipeline (MEIDP). SAGE has already completed both technical and financial feasibility studies.

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SAGE MEIDP vs Government Pipeline: Side-by-Side

The numbers SAGE has published are compelling. The proposed pipeline can deliver 31 million metric standard cubic metres per day under a 20-year supply contract. Buyers would pay a pipeline tariff of $2–2.25 per MMBtu, according to Oil & Gas Middle East. A separate Assocham study cited by MEED found the pipeline would cut gas import costs by $2–2.50 per MMBtu against LNG, saving India approximately $1 billion annually, or around ₹7,000 crore per year.

The government is now building a state-led parallel initiative. The government’s state mandate will almost certainly absorb rather than compete with SAGE’s existing work, India’s National Gas Grid rollout followed exactly this pattern—but only if the ministry acknowledges SAGE’s completed seabed surveys rather than commissioning duplicate studies.

India’s infrastructure track record on gas networks suggests state mandates tend to absorb prior private feasibility work. The ministry would be wasting time and public money starting from zero when SAGE has already completed seabed surveys and engineering studies.