India's LNG Dependence Exposes Vulnerabilities Amid Global Market Shifts

India's liquefied natural gas (LNG) import capacity has increased significantly in recent years, but this alone will not drive long-term growth in natural gas consumption. According to a report by the International Gas Union (IGU), the country needs faster investment in pipeline infrastructure and gas distribution networks.

The report states that India's current reliance on LNG imports, primarily from Qatar, Australia, the US, and Russia, is exposed to geopolitical disruptions. The Strait of Hormuz crisis has highlighted this vulnerability, with 50-52% of India's natural gas demand met through domestic production and the remainder supplied through LNG imports.

The IGU believes that a surge in new LNG export capacity over the next decade will keep global markets well-supplied, putting downward pressure on prices. However, this alone will not be enough to lift domestic consumption. Higher investment in infrastructure, improvements in commercial contracting, and broader market reforms are necessary to expand the role of natural gas in India's energy mix.

The report also questions India's existing wholesale gas pricing framework, arguing that meaningful investment will remain constrained without fundamental reforms. The current price shock has made imported gas uneconomical for Indian power producers, industrial, and domestic customers.