India’s natural gas consumption to surpass 64 BCM in 2024

Natural gas consumption in India is expected to grow by 7 per cent y-o-y to 64.35 billion cubic meters (BCM) in the current calendar year aided by lower prices and rising demand from power and industrial sectors.

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According to the International Energy Agency (IEA), India is expected to see an increase in LNG imports due to the decline in spot LNG prices in 2024. However, this growth could be tempered by the increase in domestic gas production from ONGC’s Krishna-Godavari field.

“Following an announcement by Prime Minister Narendra Modi in January, 2024, the $67 billion investment plan for developing India’s natural gas supply chain is set to maintain its momentum over the coming years. India’s natural gas consumption in 2024 is projected to increase by over 7 per cent,” the IEA said in its latest gas market report.

During October 2023-February 2024, India’s cumulative natural gas consumption rose by 17 per cent y-o-y to 28.12 BCM. In the 2023 calendar year, the consumption stood at 60.12 BCM.

The world’s fourth largest importer of liquefied natural gas (LNG) consumed 66.63 BCM natural gas in FY24, compared to 59.97 BCM and 64.16 BCM in FY23 and FY22, respectively.

Fertilisers followed by the Power sector, city gas distribution (CGD) and refineries are top natural gas consumers in the country.

Growing consumption

Lower natural gas prices continued to stimulate gas demand in India, with gas use in industry rising by an impressive 15 per cent y-o-y during the October 2023-February 2024 period, the IEA said.

According to the Petroleum Planning & Analysis Cell (PPAC), India’s primary natural gas supply (including net domestic production and LNG imports) increased by 16 per cent y-o-y between October, 2023 and February, 2024. This strong growth in supply reflects growing demand for natural gas across all sectors, it added.

The increase in consumption was mainly driven by the oil refining sector (up by more than 70 per cent y-o-y) and industry (up by over 15 per cent y-o-y), the agency noted.

The lower spot price environment led to a notable increase in overall spot tenders for the purchase of LNG cargoes, with three to four times more tenders in winter 2023/24 than in the previous winter.

These tenders also had a higher success rate, particularly since October, 2023. With lower prices, the improved competitiveness of gas in certain industries has driven a greater appetite for LNG imports.

India imported 30.92 BCM of LNG in FY24, compared to 26.30 BCM and 31.03 BCM in FY23 and FY22, respectively. Production in the last financial year stood at 35.72 BCM as against 33.66 BCM and 33.13 BCM in FY23 and FY22, respectively.

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As of March, 2024, India’s total domestic piped natural gas (PNG) connections were 1.26 crore, while industrial and commercial consumers stood at 18,500 and 40,940, respectively. The total number of compressed natural gas stations stood at 6,456.