India LNG Prices Surge Above $23/MMBtu As Iran War Disrupts Supplies

India's energy sector is grappling with soaring liquefied natural gas (LNG) prices, reaching $23 per million British thermal units (MMBtu) as of September, according to reports from state-run companies. The surge is attributed to the ongoing Iran war, which has disrupted global LNG supplies and heightened competition among buyers.

GAIL India and Gujarat State Petroleum Corp are among the entities that have paid prices in the mid-$23 range for recent LNG shipments, marking the highest such costs for India since 2022. This price jump reflects the mounting strain on the nation's energy import expenses. ONGC and Shell Energy India have entered into a Memorandum of Understanding (MoU) to explore deepwater offshore blocks and LNG opportunities, indicating a growing reliance on the spot market for gas delivery amid global disruptions.

The government's efforts to secure sufficient gas supplies for critical industries, such as fertiliser production, have pushed state-backed companies towards the volatile spot market. Restrictions on Qatar's export infrastructure due to Iranian attacks, coupled with ongoing shipping challenges in the Strait of Hormuz, have left India with limited supply options.

European importers, meanwhile, have witnessed their natural gas prices soar to levels not seen in nearly five months, further intensifying competition for LNG cargoes. This competitive landscape has compelled Indian buyers like Bharat Petroleum Corp. to also secure spot market deliveries, albeit with undisclosed prices. As a result, the elevated LNG costs could significantly impact Indian industries' expenses and exacerbate pressures on sectors heavily dependent on imported natural gas, particularly fertiliser producers, as geopolitical tensions persist in global energy markets.