India's Natural Gas Market Needs Reform, Investment to Unlock Growth

India's natural gas market needs significant reforms and investment in pipeline infrastructure to unlock its long-term growth potential, according to a report by the International Gas Union (IGU). The country currently meets only about 50-52% of its natural gas demand through domestic production, with the remainder supplied through liquefied natural gas (LNG) imports.

The IGU report highlighted that India's heavy reliance on Gulf-sourced LPGs and LNG, particularly from Qatar, makes it vulnerable to geopolitical disruptions. The recent Strait of Hormuz crisis has underlined this risk, with the current price shock affecting the economics of imported gas for Indian power producers, industrial, and domestic customers.

To take advantage of potentially cheaper LNG, India needs to make its domestic gas market more flexible. This includes further liberalisation of LNG terminal capacity bookings and system entry charges to improve market access and raise utilisation rates at import terminals.