India's gas demand rebounds to pre-disruption levels, but global LNG competition intensifies

India's natural gas consumption has returned to near pre-disruption levels, with demand reaching 197 million metric standard cubic metres per day (mmscmd) in June. This marks a 7 per cent month-on-month increase and a 2 per cent year-on-year rise, according to a research report by Equirus.

The recovery was broad-based, spanning city gas distribution (CGD), refineries, and miscellaneous users. Excluding power demand, consumption rose 7 per cent month-on-month and 4 per cent year-on-year to 176 mmscmd, indicating a widening recovery across sectors.

The growth was entirely fuelled by imported gas, with LNG consumption surging 13 per cent month-on-month and 10 per cent year-on-year to 110 mmscmd. Domestic gas supply remained flat month-on-month at 87 mmscmd and declined 8 per cent year-on-year, pushing India's import dependence to 56 per cent.

Equirus also revised May consumption figures significantly higher, to 184 mmscmd from the earlier estimate of 169 mmscmd, with LNG imports revised to 97 mmscmd from 83 mmscmd. This suggests the recovery was already stronger than initially estimated.

Sector-wise, CGD consumption rose 2.3 mmscmd month-on-month to 58 mmscmd, while miscellaneous demand increased 3.9 mmscmd to 41 mmscmd. Refinery consumption grew 2.6 mmscmd to 15 mmscmd, supported by a 25 per cent rise in imports. Fertiliser and power demand also improved, while petrochemical consumption recovered to 7 mmscmd but remained sharply below year-ago levels.

India's LNG sourcing has undergone a significant shift. The country imported around 7 million tonnes during May-July, up 15 per cent year-on-year, despite a 91 per cent collapse in Qatar volumes. The US emerged as the largest supplier, followed by Nigeria and Oman.

However, Equirus cautioned that stronger Chinese LNG buying is increasing competition for flexible cargoes. Asian spot LNG prices rose above USD 19 per million British thermal units in July and are currently above USD 20, while European gas storage remains below historical averages.

With new LNG projects ramping up globally, additional supply could eventually improve cargo availability. However, shipping constraints, sanctions, and payment risks will remain important factors in determining whether incremental supplies reach buyers such as India at attractive prices.