IGU Report Highlights Investment and Reform Needs
India's long-term natural gas growth will depend not only on expanding LNG import capacity but also on boosting capital investment in distribution and transmission infrastructure, gas-producing industries, and reforms to market design, regulation, and pricing, according to a recent report by the International Gas Union (IGU).
Although India has significantly increased the capacity of its regasification terminals, its ability to raise gas consumption has been constrained by the slow pace of investment in midstream infrastructure. The study argues that changes to price policies and market access are necessary to sustainably increase gas consumption.
Import Vulnerabilities Exposed by Strait of Hormuz Crisis
The report highlights India's heavy reliance on imports for natural gas and LPG. Domestic production covers only about 50–52 percent of the nation's gas requirements, while the remainder is met by LNG imports, primarily from Qatar, Australia, the US, and Russia. For LPG, dependence is even more pronounced: India imports 60–65 percent of its LPG needs, and a large portion of these imports pass through the Strait of Hormuz.
The Strait of Hormuz crisis, triggered by the recent Iranian war, revealed India's vulnerability to supply disruptions. The IGU report noted: "The Strait of Hormuz crisis has underlined several import dependencies for India, particularly in gas supply chains. India's heavy reliance on Gulf-sourced LPG and LNG, where Qatari exports are the primary source of supply, will bring into question India's historic reliance on close geographical suppliers that have proven to be vulnerable to disruption."
The report added: "These issues are not insignificant, and the current price shock will also, in the short term, upend the economics of imported gas for Indian power producers, industrial and domestic customers, for as long as it lasts."
Future Supply Surge Could Improve Economics
However, if the Gulf issue abates, the situation may improve in the long run, according to IGU. Throughout the rest of the decade, a surge of additional LNG export capacity is expected to come online, leaving global LNG markets well-supplied, driving down prices and boosting the economics of gas use in India.
The report underscores that accelerating market reforms and reducing import vulnerabilities are key to boosting consumption and strengthening India’s long-term energy security.
