India's Gas Growth Hinges on Infrastructure Push and Market Reforms

India's long-term natural gas growth is dependent on multiple factors including expanding liquefied natural gas (LNG) import capacity, accelerating investment in transmission and distribution infrastructure, reforming gas pricing and market regulations, and creating stronger demand from gas-intensive industries. According to a report by the International Gas Union (IGU), India has made significant progress in expanding its LNG regasification terminal capacity but failed to invest in midstream infrastructure at the same pace.

The result is that domestic production meets only around 50-52% of total natural gas demand, with the remaining requirement met through LNG imports from countries including Qatar, Australia, the United States, and Russia. India's dependence on LPG imports is even higher, with around 60-65% of domestic demand being met through overseas purchases.

The recent Strait of Hormuz crisis highlighted India's vulnerability to disruptions in energy supply chains due to its heavy reliance on LNG and liquefied petroleum gas (LPG) imports from the Gulf region. Qatar remains India's primary LNG supplier, while a substantial share of the country's LPG imports also originates from the region.

The report notes that a large wave of new LNG export capacity expected to come online during the remainder of the decade is likely to keep global LNG markets well supplied, placing downward pressure on prices and improving the economics of gas consumption in India. Weaker demand in other Asian markets following the recent price shock could further accelerate declines in regional LNG benchmark prices.