India's Natural Gas Imports Rise Despite Surging Prices

India's natural gas imports continue to rise despite a sharp increase in prices this fiscal year. The demand for natural gas has been driven by several factors, including a boost from the subsidised fertiliser sector and growing CNG vehicle sales.

The limited supply of alternative fuels such as LPG and falling domestic gas production have also contributed to the increasing imports. However, a recent surge in spot liquefied natural gas (LNG) prices to $25 per mmbtu may partly dent demand or push consumers towards alternative fuels.

India is currently sourcing about 35-40% of its imports from the spot market due to Gulf gas supplies being disrupted by the Iran war. Spot LNG has been pricier than those procured under long-term contracts, where rates are linked to crude oil or the US gas benchmark and have risen far less.

Some local suppliers have been blending volumes from expensive spots and cheaper long-term contracts to keep LNG rates acceptable to customers. LNG imports rose 5% year-on-year by volume and 25% by value to $5.6 billion during April-July, according to oil ministry data.