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Natural gas imports rise despite price surge

By Sohail Khan 15 September 2026, 12:57 am

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Natural gas imports rise despite price surge
Synopsis

India's natural gas imports are increasing despite higher prices this fiscal year. Demand is boosted by subsidized fertilizer and growing CNG vehicle sales. Limited alternative fuel supply and falling domestic production also contribute to this trend. Recent surges in spot LNG prices may impact future demand and consumer choices. The fertilizer sector remains the largest driver of these growing import volumes.

New Delhi: India's natural gas imports continued to grow despite a sharp rise in prices this fiscal year. Demand got a boost from a subsidised fertiliser sector, growing CNG vehicle sales, limited supply of alternative fuels such as LPG and falling domestic gas production.

However, a recent surge in spot liquefied natural gas (LNG) prices to $25 per mmbtu may partly dent demand or push consumers towards alternative fuels, said industry executives. With Gulf gas supplies disrupted due to the Iran war, India is currently sourcing about 35-40% of its imports from the spot market. Asian spot benchmark JKM averaged $19 per mmbtu in the April-August period, up from $12 in the same period last year.

Spot LNG has been pricier than those procured under long-term contracts where rates are linked to crude oil or the US gas benchmark and have risen far less. At an April-August Brent average of $90 per barrel, LNG could have cost $11-12 per mmbtu, while the US gas benchmark has remained largely unchanged from last year.

Some local suppliers have been blending volumes from expensive spots and cheaper long-term contracts to keep LNG rates acceptable to customers. LNG imports rose 5% year-on-year by volume and 25% by value to $5.6 billion during April-July, according to oil ministry data. August imports rose 5% over July, according to Kpler.

Overall domestic gas consumption has also held up, rising about 0.5% year-on-year to 22.9 billion cubic meters (bcm). "The resilience in India's LNG imports is being driven primarily by continued growth in city-gas demand and broadly stable fertiliser consumption," said Sonal Ranjan, analyst at analytics firm Kpler. "These are relatively price-insulated parts of India's gas market: city gas benefits from priority domestic gas allocation, while fertiliser is heavily supported through government subsidies."

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The fertiliser sector was the largest driver of imports, accounting for a quarter of total LNG imports in the April-July period.

Its imported gas consumption was 5% more than last year, which, at this year's higher prices, would inflate the government's fertiliser subsidy bill.

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