Expensive LNG Forces India to Rethink Gas Consumption

India's LNG consumption fell during the first half of 2025 as high prices and lower domestic output reshaped the country's energy market.

Expensive LNG forced India to rethink gas consumption across industries. Rising costs, weaker local production, and supply concerns slowed demand despite the country's long-term push for cleaner fuels.

According to the International Gas Union (IGU), India's gas demand weakened after global conflicts pushed LNG prices higher. At the same time, domestic production declined, making it difficult to maintain earlier growth levels.

Global Conflict and High Prices Hurt Gas Demand

India's LNG imports dropped by 7.1% during the first six months of 2025. Total imports stood at 14.3 billion cubic meters (bcm). The decline came as spot LNG prices increased sharply after the Israel-Iran conflict disrupted global markets.

The report said higher prices forced many price-sensitive consumers to reduce purchases. Several industries also shifted to alternative fuels where possible. The increase in import costs made LNG less attractive for power generation and industrial use.

The International Gas Union noted that India remained vulnerable to global price movements because the country still depends heavily on imported LNG to meet rising energy needs.

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Lower Domestic Output Added Pressure

India also faced challenges from domestic gas production, which fell by 1.7% during the same period. Output declined to 17.8 bcm.

Production from older gas fields continued to fall. Although newer deepwater projects added some supply, they could not fully offset the decline. Lower domestic output increased reliance on imports at a time when international prices remained high.

The report also highlighted that limited affordable gas supplies affected several sectors. This reduced overall energy demand for LNG during the period.

Long-Term Growth Story Remains Intact

Despite the slowdown, the International Gas Union believes India's gas market has strong long-term potential. The country continues to expand its gas infrastructure. New LNG terminals, pipelines, and city gas distribution networks are under development.

The government has also set a target to increase the share of natural gas in India's energy mix from around 6% to 15% over the coming years. Achieving this goal will require stable supplies and affordable pricing.

Experts believe future demand will depend on international market conditions. A recovery in gas prices and improved supply stability could support higher consumption. Increased domestic production would also reduce dependence on imported fuel.

The report said India is expected to remain one of the fastest-growing gas markets globally. However, price volatility caused by global conflict will continue to influence buying decisions.

Key Highlights

• India's LNG consumption declined in the first half of 2025.
• LNG imports fell 7.1% to 14.3 bcm.
• Domestic gas production dropped 1.7% to 17.8 bcm.
• Higher global LNG prices reduced industrial demand.
• India continues investing in gas infrastructure for long-term growth.
• The government aims to raise gas's share in the energy mix to 15%.
• Future demand depends on affordable prices and stronger local production.