India’s Gas Consumption Set to Surge by 2030
India is poised for a significant increase in gas consumption, with projections indicating a surge of 60% by 2030. This rise will elevate the country’s gas usage to 103 billion cubic meters (bcm). The International Energy Agency (IEA) released a special report highlighting this trend during the India Energy Week. The report emphasizes the need for further liberalization of the domestic gas market as global supply increases. As India aims to boost the share of gas in its energy mix from just over 6% to 15%, the implications for liquefied natural gas (LNG) imports are profound.
Projected Growth in Gas Demand
The IEA’s report outlines a potential for even greater growth in gas demand, estimating that targeted policy measures could push total consumption to approximately 120 bcm by 2030. This level of demand would be comparable to the current gas consumption of South America. The report indicates that while domestic natural gas production is expected to see only marginal growth, LNG imports will play a crucial role in meeting the increasing demand.
Currently, domestic production meets about half of India’s gas needs. However, by 2030, this figure is projected to rise to just under 38 bcm, which is only about 8% above 2023 levels. Consequently, LNG imports will need to more than double to around 65 bcm annually to fill the gap. The widening gap between contracted LNG supply and projected requirements after 2028 raises concerns about India’s exposure to the volatility of the spot LNG market unless new contracts are secured.
The Role of City Gas Distribution
The city gas distribution sector is expected to lead the charge in gas consumption growth through 2030. This growth will be supported by rapid expansion in compressed natural gas (CNG) infrastructure and competitive pricing against traditional liquid fuels. The IEA report notes that heavy industry and manufacturing sectors are also anticipated to contribute significantly to demand, adding around 15 bcm during this period. Additionally, gas use in oil refining is forecasted to increase by more than 4 bcm as more refineries connect to the gas network.
The demand for gas has already shown a marked increase of over 10% in both 2023 and 2024. This trend indicates a pivotal moment for India’s energy landscape, driven by rapid infrastructure expansion and supportive policies. The growth in the city gas distribution sector, coupled with rising industrial demand, underscores the importance of strategic planning in the gas market.
Strategic Planning for LNG Procurement
Looking ahead, the IEA report emphasizes the necessity for strategic planning in LNG procurement and import infrastructure. As legacy contracts expire, India faces a widening gap between contracted supply and projected demand after 2028. This situation could lead to increased exposure to spot market volatility unless new long-term contracts are secured in the coming years.
Keisuke Sadamori, IEA’s director of energy markets and security, highlights the importance of careful planning and market coordination. He notes that the anticipated rise in gas demand coincides with a wave of new global LNG supply. However, ensuring supply security will be critical for India to compete in a price-sensitive market. The report calls for proactive measures to secure additional LNG contracts and enhance import infrastructure to meet future demand effectively.
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