Indian energy companies are shifting from expensive liquefied natural gas (LNG) to more affordable oil-based fuels, easing pressure on global LNG supplies.
Firms like Gail India Ltd. and Indian Oil Corp. have reportedly withdrawn LNG purchase tenders due to high prices, according to sources familiar with the matter who requested anonymity. India’s LNG imports are projected to average 1.9 million tons this month—down 5% from the same period last year and the lowest since December 2023, according to data from analytics firm Kpler.
LNG prices have surged following a series of disruptions at export facilities in countries including Malaysia and Australia, despite ongoing concerns that global trade tensions could dampen gas demand. India’s reduced buying may benefit other LNG importers in Asia and Europe by increasing available supply.Spot LNG prices in India have ranged from $11 to $12 per million Btu recently, while naphtha is cheaper at $8 to $9 due to falling crude prices.
This price gap is prompting refiners—who make up 12% of India’s LNG use—to switch to naphtha, which is in ample supply due to shutdowns at petrochemical plants like Haldia Petrochemicals and Gail’s Uttar Pradesh unit. Additionally, industries such as ceramic tile manufacturers are turning to more affordable propane, and local gas supplies have increased due to temporary shutdowns at Reliance’s Jamnagar refinery and some fertilizer plants.
However, India’s LNG demand could quickly rebound if rising summer temperatures in the coming months lead the government to require increased gas-fired power generation, sources noted. A significant portion of the country’s gas-powered plants is currently inactive due to elevated LNG costs.
