India's LNG Demand Expected to Dip in 2025 Amid Price Concerns

India's liquefied natural gas (LNG) market is poised for a significant shift, with demand expected to contract in 2025 for the first time in recent years. This anticipated decline comes as buyers await an impending surge in global supply that could potentially drive prices down.

Current Market Dynamics

The world's fourth-largest LNG importer has already shown signs of reduced consumption. In the first eight months of the year through August, India purchased approximately 16 million tons of LNG, marking a 10% decrease compared to the same period last year. This downturn can be attributed to several factors:

• High spot prices making LNG less competitive against alternative fuels
• Reduced power demand due to monsoon rains
• Asian spot LNG prices trading above $11.00 per million British thermal units, exceeding the typical purchase threshold for Indian companies

Impact on Industrial Sectors

The elevated costs of LNG have had a ripple effect across various industries:

• Refineries and fertilizer sectors experienced a drop in demand
• Industrial consumers have been forced to seek alternative energy sources

Future Outlook

Despite the current slump, the long-term prospects for India's LNG market remain positive:

• Rystad Energy projects India's annual LNG demand to surpass 40 million tons by 2030, up from 26 million tons in the previous year
• The Indian government aims to double natural gas's share in the energy mix to 15% by 2030

Supply Expansion and Market Recovery

The LNG market is expected to see a significant shift from 2026 onwards:

• New projects from the US to Qatar are set to come online
• Supply volumes are anticipated to exceed demand growth
• This increased supply is likely to trigger a recovery in India's LNG imports

Industry Movements

Several key players in the Indian energy sector are making strategic moves in anticipation of market changes:

• Gail India and Petronet LNG have been in discussions with suppliers for long-term deals
• Shell is seeking approval to expand its west coast import terminal
• Invenire Energy has received permission for a new east coast facility

As the global LNG landscape evolves, India's position as a major importer continues to be significant. The expected contraction in 2025 may be a temporary setback in an otherwise growing market, with industry players and policymakers alike preparing for a more robust future in natural gas consumption.