India’s gas demand returns to pre-disruption levels, but global LNG competition rises: Equirus

NEW DELHI: India’s natural gas consumption recovered to near pre-disruption levels in June 2026, with broad-based demand growth across key sectors, even as rising global LNG competition and elevated spot prices could pose risks to the outlook, according to a research report by Equirus.

India’s gas consumption increased 7 per cent month-on-month and 2 per cent year-on-year to 197 million metric standard cubic metres per day (mmscmd) in June. Excluding power demand, consumption rose 7 per cent month-on-month and 4 per cent year-on-year to 176 mmscmd, indicating a broadening recovery.

The increase was entirely driven by imported gas, with LNG consumption rising 13 per cent month-on-month and 10 per cent year-on-year to 110 mmscmd. Domestic gas supply remained flat month-on-month at 87 mmscmd and declined 8 per cent year-on-year, taking India’s import dependence to 56 per cent.

Equirus noted that May consumption was revised significantly higher to 184 mmscmd from the earlier 169 mmscmd, while LNG imports were revised to 97 mmscmd from 83 mmscmd. This revision has altered the demand narrative, suggesting that the recovery was already stronger than initially estimated.

Demand growth in June was broad-based, led by city gas distribution (CGD), miscellaneous users and refineries. CGD consumption increased 2.3 mmscmd month-on-month to 58 mmscmd, while miscellaneous demand rose 3.9 mmscmd to 41 mmscmd. Refinery consumption increased 2.6 mmscmd to 15 mmscmd, supported by a 25 per cent rise in imports. Fertiliser and power demand also improved, while petrochemical consumption recovered to 7 mmscmd but remained sharply below year-ago levels.

The domestic brokerage firm expects July demand to remain strong, although slightly softer than June due to lower power consumption. Demand could weaken in August amid lower Morbi-related consumption and seasonal softness.

Meanwhile, India’s LNG sourcing has undergone a significant shift. The country imported around 7 million tonnes during May-July, up 15 per cent year-on-year, despite a 91 per cent collapse in Qatar volumes. The US emerged as the largest supplier, followed by Nigeria and Oman, reducing India’s immediate dependence on Qatar.

However, Equirus cautioned that stronger Chinese LNG buying is increasing competition for flexible cargoes. Asian spot LNG prices rose above USD 19 per million British thermal units in July and are currently above USD 20, while European gas storage remains below historical averages.

With new LNG projects ramping up globally, additional supply could eventually improve cargo availability. However, shipping constraints, sanctions and payment risks will remain important factors in determining whether incremental supplies reach buyers such as India at attractive prices. (ANI)