India Must Diversify Import Portfolio, Invest in Infrastructure for Long-Term Gas Growth

India's long-term natural gas growth will depend on expanding LNG import capacity and accelerating investment in transmission and distribution infrastructure, according to a report by the International Gas Union (IGU). The country has significantly expanded regasification terminal capacity, but the pace of investment in midstream infrastructure has lagged, limiting its ability to increase gas consumption.

The report argues that reforms to pricing mechanisms and market access are essential to support sustained growth in gas demand. India's heavy reliance on Gulf-sourced LPGs and LNG, particularly from Qatar, makes it vulnerable to disruptions, as seen during the Strait of Hormuz crisis.

India remains heavily dependent on imports to meet its natural gas and LPG requirements, with domestic gas output meeting around 50-52% of the country's demand. The balance is met through imports of liquefied natural gas (LNG), primarily from Qatar, Australia, the US, and Russia.

The report notes that a wave of new LNG export capacity expected to come online will leave global LNG markets well supplied, putting downward pressure on prices and improving the economics of gas consumption in India. However, meaningful investment is unlikely without fundamental reform of wholesale gas pricing.