India's Natural Gas Growth Hinges on Investment and Reforms

India's long-term natural gas growth heavily relies on investment in distribution and transmission infrastructure as well as reforms to market design, regulation, and pricing. According to a recent report by the International Gas Union (IGU), India has significantly increased its liquefied natural gas (LNG) import capacity but still struggles with raising gas consumption due to slow investment in midstream infrastructure.

The study emphasizes that price policies and market access need to be revised to sustainably increase gas consumption. The Strait of Hormuz crisis has highlighted India's reliance on Gulf-sourced LPGs and LNG, with Qatari exports being the primary source of supply. This reliance has made India vulnerable to disruptions in global energy passage.

India currently meets 50-52% of its natural gas requirements through domestic production, while the remaining portion comes from imports, mainly from Qatar, Australia, the US, and Russia. For LPG, India's dependence on imports is even higher, with around 60-65% of its needs met through imports.

The report suggests that a surge in additional LNG export capacity coming online over the next decade could drive down prices and improve the economics of gas use in India. However, this depends on the resolution of the Gulf issue and potential disruptions to global energy passage.