India’s natural gas consumption is projected to surge from 65 billion cubic metres (Bcm) in 2023 to 113.7 Bcm by 2040, according to a recent report by Rystad Energy.
This dramatic increase, nearly doubling current levels, is driven by population growth, economic development, and a shift towards cleaner energy sources.
While domestic gas production is expected to rise by 51 per cent to 36.7 Bcm by 2025, this increase will not be sufficient to meet the country’s growing energy needs.
As a result, India will continue to rely heavily on imports to satisfy its future natural gas demand.
To address this challenge, India has taken proactive steps by signing long-term contracts extending into 2030 and beyond.
These agreements aim to shield the country from global price fluctuations and ensure a steady supply of gas, strengthening India’s position in the liquefied natural gas (LNG) market.
The growth in natural gas demand is expected to come from various sectors:
- City Gas Distribution (CGD) network
- Fertiliser industry
- Refining and petrochemicals
The fertiliser industry, particularly urea production, heavily relies on natural gas as a key input.
With the government’s focus on food security, substantial subsidies for urea production continue to drive steady demand for gas in this sector.
Despite the positive outlook, India’s gas sector faces several challenges:
- History of renegotiating or abandoning near-complete deals
- Slow infrastructure development
- The concentration of regasification terminals in Western India
However, opportunities for growth remain. Kaushal Ramesh, Vice President of Gas & LNG Research at Rystad Energy, suggests that continued dealings with the Middle East could be a strategic next step for India.
The geographical proximity and substantial uncontracted LNG production in the Middle East present an excellent opportunity for India to secure favourable terms.
As India continues to balance its energy needs with environmental concerns, the natural gas sector is poised for significant growth in the coming decades.
The country’s ability to overcome infrastructure challenges and secure reliable supply chains will be crucial in realising this potential.