India’s natural gas consumption is expected to see a significant jump by the end of this decade, which in turn is set to lead to a surge in the country’s liquefied natural gas (LNG) imports, Paris-based International Energy Agency (IEA) said Wednesday.
According to IEA’s estimates, India’s gas consumption is seen rising nearly 60 per cent over to 2023 levels to 103 billion cubic metres (bcm), while LNG imports are set to more than double between 2023 and 2030 to 65 bcm a year, driven by steady demand growth and a much slower rise in domestic production.
In view of the anticipated growth in gas consumption, the multilateral energy agency recommended that India should completely deregulate pricing of domestic natural gas, unbundle gas marketing and transportation businesses, and focus on enhancing gas-related infrastructure and ensuring gas supply security, among others.
“India’s natural gas consumption is forecast to increase by nearly 60% by 2030, driven by robust growth in city gas distribution, industrial demand, and power generation… Targeted strategies and policy interventions could boost gas consumption beyond the forecasted trajectory to around 120 bcm/yr by 2030, close to the current gas consumption of the entire continent of South America,” the IEA said in its special publication ‘India Gas Market Report: Outlook to 2030’.
The targeted strategies mentioned by the IEA include driving higher utilisation of gas-based power plants, faster adoption of LNG in heavy-duty transport, and further accelerating expansion of city gas infrastructure.
Following over a decade of slow growth and periodic declines, India’s natural gas demand increased by more than 10 per cent in 2023 as well as 2024, indicating an “inflection point”, according to the IEA. India aims to increase the share of natural gas in its primary energy mix to 15 per cent by 2030 from a little over 6 per cent currently.
“While total gas consumption in 2023 was only marginally higher than 2011 levels, three key factors are now converging to drive substantial growth: rapid infrastructure, recovering domestic production, and an expected easing of global gas market conditions,” the agency said.
But India’s domestic gas production, which met nearly half of the country’s gas demand in 2023, is expected to grow only moderately through 2030. This means that much of the expected gas consumption surge will have to be serviced through import of LNG, or super-chilled gas.
“Between 2013 and 2023, India’s LNG imports increased by 70%, and reached 36 bcm in 2024, matching the previous record set in 2020 and cementing the country’s position as the fourth-largest LNG importer globally. Looking ahead, India’s LNG demand is projected to grow steadily, reaching 64 bcm/yr by 2030. This represents an annual average growth rate of 11% for the 2023-2030 period, twice the average rate observed in the previous ten years,” the IEA said.
The IEA, however, cautioned that India should undertake strategic planning in LNG procurement and import infrastructure over the coming years as the country could face a widening gap between contracted LNG supply and projected demand, particularly after 2028. This could potentially increase the country’s exposure to LNG price volatility unless new long-term contracts are secured. Indian LNG importers are in the market to ink more long-term LNG contracts to secure supplies for the next few years.
The agency noted that infrastructure development is playing a crucial role in enabling gas market growth in India. Since 2019, the country has nearly quadrupled the number of compressed natural gas (CNG) stations and more than doubled the number of residential gas connections. The country has also expanded its natural gas transmission pipeline network by 40 per cent. By 2030, CNG stations and residential gas connections are likely to double again, while the gas transmission grid may expand by another 50 per cent.
“The city gas distribution sector is expected to lead consumption growth in India between now and 2030, supported by rapid CNG infrastructure expansion and competitive pricing against liquid fuels. The heavy industry and manufacturing sectors are expected to add around 15 bcm of demand during this period, while gas use in oil refining is forecast to increase by more than 4 bcm as more refineries connect to the network,” the IEA said.
