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An early and robust monsoon with plentiful rainfall and volatility in liquefied natural gas (LNG) prices were key reasons behind a double-digit decline in India’s LNG imports in the first half of the current financial year 2025-26 (FY26), according to experts and oil industry executives, and an analysis of data from the Ministry of Petroleum and Natural Gas (MoPNG).
India’s LNG imports in the April-September period declined 11.1 per cent to 16.9 billion cubic metres (bcm) from 19.0 bcm in the corresponding six months of the previous financial year, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the MoPNG. Notably, India’s LNG imports declined despite a fall in domestic natural gas production during the same period to 17.6 bcm from 18.2 bcm.
With the decline in LNG imports, India’s reliance on imported gas contracted to 49.3 per cent in April-September to 51.5 per cent a year ago, according to PPAC’s estimates. India’s domestic natural gas production is much lower than the country’s gas demand, and nearly half of its consumption is met through LNG imports. India is the world’s fourth-largest importer of LNG.
Rainfall during this year’s southwest monsoon season—June to September—was 108 per cent of the long period average, with the highest rainfall since 2001, according to the India Meteorological Department (IMD). Consequently, power demand cooled off during the period, which in turn meant that gas-based power plants did not need as much natural gas as feedstock.
Also, with the volatility in the international LNG market and elevated spot prices for much of the period under consideration, some other gas-consuming industries like fertilisers and refineries switched to alternative fuels like naphtha, according to industry insiders. All this led to a year-on-year decline in LNG imports.
“We were prepared to import LNG in large volumes, anticipating higher-than-usual demand from the power sector. But the need did not arise as power demand did not jump significantly due to the rains this year,” said a senior executive at an Indian oil and gas company that imports LNG.
“As for other sectors, the high spot prices reduced their gas offtake, which also contributed to lower LNG imports,” said the official.
LNG, or super-chilled gas, is natural gas liquefied by cooling it at extremely low temperatures, which significantly reduces the volume of gas and makes it easier to store and transport in large quantities using LNG vessels. Once imported, LNG is usually converted back into the gaseous state, and is called regassified LNG (RLNG) in industry parlance.
RLNG use in the power sector declined almost 18 per cent year-on-year to 1.8 bcm as an early, strong, and extended monsoon led to lower power demand during the period. While gas-based power production is usually not significant in India and a major part of the production capacity usually remains unutilied, gas-based power output is relatively higher during the peak summer and monsoon season.
According to data from the Central Electricity Authority (CEA), gas-based power production in India fell by a fourth to 15.8 billion units (1 unit is 1 kilowatt hour)in the first half of the current financial year from 21.2 billion units a year ago. The plant load factor for gas-based units in April-September contracted to 17.9 per cent from 19.4 per cent in the year-ago period.
RLNG consumption in the fertiliser sector—the biggest gas consuming sector in India—dropped 8.5 per cent year-on-year to 8.2 bcm, the PPAC data shows. As for the refinery sector, RLNG consumption declined 17.3 per cent to 1.9 bcm in April-September from 2.3 bcm in the corresponding period of last year, as per the PPAC data. Industry sources attributed lower RLNG use in these sectors to alternative fuels like naphtha turning more economical given the relatively high spot LNG prices.
Experts don’t expect this trend of a decline in LNG imports to hold beyond the current financial year as global LNG prices are expected to cool down with large supply capacity coming online globally starting 2026. With lower LNG prices, price-sensitive Indian industries are expected to increase gas use. Indian gas importers see the dip in consumption of imported gas as a temporary phase, and remain committed to expanding the country’s LNG import capacity over the coming years.
The fast-expanding city gas distribution sector saw higher RLNG use as alternative fuels are not really an option for this industry. Imported gas use in this sector rose 23.1 per cent year-on-year to 2.9 bcm in the first half of FY26. RLNG use in a few other sectors also rose, but not significantly. Overall, India’s consumption of imported gas in April-September was down 4.9 per cent year-on-year at 17.9 bcm. LNG import and consumption data for the period is not strictly comparable as there is a time lag between the import and use of super-chilled gas.
The government has been pushing for higher consumption of natural gas in India, with an aim to increase the share of the fuel in the country’s primary energy mix to 15 per cent by 2030 from over 6 per cent at present. The push for higher natural gas consumption, even if it leads to higher imports, is not without reason. Natural gas is far less polluting than conventional hydrocarbons like crude oil and coal, and is usually cheaper than oil, for which India depends on imports to meet over 88 per cent of its requirement.
As the country moves towards green energy and future fuels, natural gas is seen as a key transition fuel in that journey. Various sectors, including the likes of city gas distribution, fertilizer, power generation, and refineries and petrochemicals, are seen as major growth areas for natural gas demand in India.
