India’s Natural Gas Demand to Grow 6% in 2024, Driven by Industrial and Power Sectors

By Editor


India is poised to experience a 6 percent growth in natural gas demand in 2024, as projected by the International Energy Agency (IEA).

This growth is primarily attributed to increased usage in the industrial sector, including the fertilizer industry, and heightened gas consumption in the power sector. The expansion is further supported by India’s ongoing efforts in developing a national pipeline grid and city gas infrastructure.

After a notable 7 percent year-on-year decline in 2022, India’s primary gas supply rebounded with a 5 percent year-on-year increase in 2023, as reported by the Petroleum Planning & Analysis Cell. The growth in gas demand is spearheaded by sectors such as petrochemicals, power generation, refining, and industry.

China Secures Position as Top LNG Importer in 2023, While India Eyes 7 percent Increase in LNG Imports in 2024

In 2023, China reclaimed its status as the world’s largest LNG importer, surpassing Japan and Korea in LNG import volumes. The Asia Pacific region experienced a revival in 2023, witnessing a 4 percent year-on-year increase (14 bcm) in LNG imports. This growth was notably driven by substantial increases in LNG imports by China (up 14 percent or 11.5 bcm), Thailand (up 40 percent or 4 bcm), and India (up 11 percent or 3 bcm).

Projections for 2024 indicate a further surge in China’s LNG imports, expected to increase by over 10 percent compared to 2023 levels. Similarly, India is anticipated to boost its LNG imports by 7 percent, driven by demand from the power and fertilizer sectors, aligning with the country’s plan to cease urea imports by 2025.

India Advances Gas Market Reforms in 2023

India continued its commitment to gas market reforms throughout 2023. One significant milestone was the introduction of a unified pipeline tariff system on April 1, designed to benefit consumers located far from domestic gas supply sources or LNG terminals. In addition to these market reforms, India is contemplating the establishment of strategic gas reserves to fortify gas supply security.

Unified Tariff Policy Aims for Transparency and Accessibility

The Petroleum and Natural Gas Regulatory Board (PNGRB) implemented the Unified Tariff (UFT) policy in April 2023, creating a consistent and fair tariff structure for natural gas transport across the country.

Covering 21 pipelines, representing approximately 90 percent of those in operation or under construction, the UFT policy comprises a fixed charge (unified tariff) and a variable charge (zonal factor) based on the distance from the gas entry point. This policy aims to foster stability, competition, and transparency in gas pricing, aligning with the government’s vision of achieving the “One Nation One Grid One Tariff” model.

Strategic Gas Storage Initiatives to Boost India’s Energy Supply Security

India, currently lacking underground storage sites and with limited LNG storage capacity (1.5 bcm), is contemplating strategic gas storage initiatives to enhance energy supply security and mitigate price volatility. In May 2023, the Energy Transition Advisory Committee (ETAC) proposed the development of such storage.

Subsequently, in November 2023, the Indian government requested national oil and gas companies to conduct a feasibility study on potential gas storage facilities with a capacity of 3-4 bcm. This initiative is geared towards fortifying India’s energy supply security and reducing dependence on external factors.

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