NEW DELHI: Gas consumption in India jumped 11% annually in 2024, leading to a spike in LNG (liquefied natural gas) imports for meeting rising demand across sectors — a development that is in line with the government’s low-carbon ambitions for the economy but also raises energy security vulnerability amid declining domestic production.
While industries and oil refineries were the key drivers, the International Energy Agency’s latest gas market report published on Tuesday said consumption in the residential and commercial as well as transport sectors also recorded double-digit growth, supported by lower relative prices of imported gas.
Industry posted a gas consumption growth of 22%, refining 26%, residential and commercial sector 14% and transport sector 12%, the report said. Heatwaves in the May-July period also jacked up gas consumption for power generation by 32% as electricity demand rose to record levels due to increased usage of cooling appliances.
“This demand growth led to a 21% year-on-year rise in LNG imports, supported by average spot LNG prices in India that were more than 12% lower than a year ago,” the IEA report said. “In 2024 the number of LNG cargoes tendered for delivery (both supplier offers and user invitations) in India increased by 70% year-on-year. The number of cargoes awarded increased by 85%, while the number of cargoes not awarded decreased by 20%,” the report said.
The government wants to raise the share of natural gas in India’s energy basket to 15% from a little less than 7% at present to 15% by 2030. It is aggressively pushing CNG in intra- and inter-city transport through city gas services and trying out LNG for long-haul trucking in addition to encouraging industries to make the switch.
The IEA report forecast India’s gas demand to increase by 8% this year, assuming average weather conditions, driven by the country’s growing energy needs and rapid economic expansion. This makes raising domestic production a priority for the government. “Domestic production has been declining slightly since July 2024 (comparing monthly production with 2023). However, incentives for gas producers and investment in exploration and production are expected to further boost production with the aim of achieving greater energy security,” the report said.
In 2024 India was the world’s fourth-largest LNG importer, accounting for nearly 7% of global LNG imports, and it remains an attractive market for long-term suppliers. Just over 15 bcm (billion cubic meters) per year of new sales and purchase agreements were signed in 2024, including the renewal for 20 years of Qatar’s 10 bcm/yr contract starting from 2028.
The strategy of diversifying LNG supplies in the coming years is reflected in the signing of new long-term contracts with portfolio players totalling more than 4 bcm/yr, with the remainder of the 15 bcm/yr of newly signed contracts coming from the United Arab Emirates and the United States.
