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Fueled by population growth, economic development and a shift towards cleaner energy, India’s gas consumption is expected to nearly double to 113.7 billion cubic meters (Bcm) by 2040 from 65 billion cubic meters (Bcm) in 2023, according to Rystad Energy’s research. Near-term demand is supported by a 51% jump in domestic gas production since 2020 to 36.7 Bcm by 2025, but this will not be enough to meet the country’s growing demand for natural gas. The result is that India will continue to rely heavily on imports to satisfy its future energy needs.
Recognizing this uptick in gas demand, India has bolstered its trade security by signing long-term contracts extending into 2030 and beyond. These agreements help shield India from global price fluctuations and supply chain disruptions, ensuring a steady flow of gas to support its growing economy. By securing these agreements, the country not only enhances its energy security but also strengthens its position in the global liquified natural gas (LNG) market, advancing its shift toward a cleaner energy mix.
The nation’s heavy reliance on coal is clear, particularly during recent heatwaves which have temporarily driven up coal usage alongside LNG for power generation. Gas, on the other hand, currently accounts for just 2% of the country’s power mix, as the focus remains on more cost-effective options like coal and renewables – in fact, coal-generated power is not projected to start falling this side of 2040. While gas-for-power isn’t expected to be a major driver for gas demand, the sector could still see growth, however, depending on future policies to promote coal-to-gas switching or introduce carbon pricing.
India’s LNG sector is experiencing significant growth. Looking ahead, a strategic next step could involve continued dealings with the Middle East. The geographical proximity of the two regions, combined with the substantial volume of uncontracted LNG production in the Middle East, presents an excellent opportunity for India to secure favorable terms – it’s an ideal buyer-seller relationship that could help fuel India’s needs. The nation is well-positioned to attract aggressive targeting from Middle Eastern producers and offtakers, with nearly 100 million tonnes per annum of Middle East LNG remaining uncontracted by 2035,
