New Delhi, July 26 (IANS) India’s long-term natural gas growth will depend not only on expanding liquefied natural gas (LNG) import capacity but also on accelerating investment in transmission and distribution infrastructure, reforming gas pricing and market regulations, and creating stronger demand from gas-intensive industries, according to a new report by the International Gas Union (IGU).

The report said that while India has made significant progress in expanding its LNG regasification terminal capacity, investment in midstream infrastructure has failed to keep pace, restricting the country’s ability to increase natural gas consumption. It added that reforms to pricing mechanisms, market access and commercial frameworks will be critical to supporting sustained growth in gas demand.

The IGU said the recent Strait of Hormuz crisis has highlighted India’s vulnerability to disruptions in energy supply chains, particularly because of its heavy reliance on LNG and liquefied petroleum gas (LPG) imports from the Gulf region. Qatar remains India’s primary LNG supplier, while a substantial share of the country’s LPG imports also originates from the region.

According to the report, India’s dependence on imported gas remains significant, with domestic production meeting only around 50-52 per cent of total natural gas demand.

The remaining requirement is met through LNG imports from countries including Qatar, Australia, the United States and Russia. India’s dependence on LPG imports is even higher, with around 60-65 per cent of domestic demand being met through overseas purchases despite the country being among the world’s largest LPG consumers.

Much of these imports pass through the Strait of Hormuz. The recent disruption to energy shipments during the Iran conflict exposed the risks associated with India’s reliance on the strategically important maritime route.

The report, however, said the medium- to long-term outlook could improve if tensions in the Gulf region ease. A large wave of new LNG export capacity expected to come online during the remainder of the decade is likely to keep global LNG markets well supplied, placing downward pressure on prices and improving the economics of gas consumption in India.

It added that weaker demand in other Asian markets following the recent price shock could further accelerate declines in regional LNG benchmark prices.

–IANS

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