India's LNG imports are set to hit a record in October even as regional benchmark prices have tripled. Stagnant domestic output, subsidy-backed fertilizer production and expanding city gas networks sustain the buying. Tight coal supplies could add power generators to the demand.
India's LNG imports are set to hit a record 2.8 million tonnes in October, up 18% year-on-year, even though benchmark prices in the region have tripled to $33/MMBtu. Around 2.5 million tonnes have already arrived. Arrivals from Qatar and the UAE are rising by 80% and 30% month-on-month, respectively.
Domestic output falls behind demand
Consumption increased from 60 billion m3 in 2022 to 68.5 billion m3 in 2025. Domestic production, meanwhile, has stagnated at around 34–36 billion m3 annually for the past four years. Domestic gas covered 57% of consumption in 2022, but just 47% in April–September this year, leaving LNG to fill the gap.
Qatar previously supplied roughly 45% of India's 24.9 million tonnes of LNG imports in 2025. Its near-disappearance after the US-Iran war began in late February 2026 cut imports in the spring, but US cargoes covered around 1/3 of monthly arrivals through September.
Fertilizer and city gas hold up
Demand is concentrated in two sectors. Fertilizer production accounts for around 29% of India's gas consumption and city gas distribution for another 28.5%. Over the past six months, the majority of consuming sectors have cut gas use by 10–25%, but fertilizer demand has fallen only about 2%, and city gas consumption has risen roughly 20%.
Fertilizer makers have kept buying with the West Coast India marker at $32-33/MMBtu, compared with $11/MMBtu a year earlier. Government subsidies and policy support have insulated this demand from the price shock, according to the source.
City gas use rose from 1.38 billion m3 in August 2025 to 1.67 billion m3 in August 2026. The Gulf crisis and the closure of the Strait of Hormuz also cut India's LPG imports from 2 million tonnes in February to 1.1 million tonnes in March, prompting restaurants, hotels and some households to switch to piped supplies.
Coal shortages may pull in more gas
Power generation could become another call on imported natural gas. Coal-fired output rose 12.5% in July-September, and reportedly 95 of India's 191 coal-fired plants have critically low fuel stocks.
Coal purchases are expected to rise 10% year-on-year in October to 21.3 million tonnes, which could ease the pressure. If shortages persist, however, greater use of gas-fired generating capacity may be needed as a short-term remedy, leaving India more exposed to expensive LNG.
Source: Oilprice.com
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