India’s Record LNG Buying Meets Record-High Prices

India has been gradually increasing its liquefied natural gas (LNG) purchases as domestic production declines and prices have tripled in the past year. Imports are on track for a record in October. The mix of LNG supplies has shifted since the US-Iran war began in late February 2026, with Qatar once supplying around 45% of India's 24.9 million tonnes of LNG imports.

This departure from Qatar led to a drop in Indian imports during spring months, but US cargoes stepped in to cover roughly one-third of monthly arrivals through September. The restoration of Gulf flows in September, albeit still vulnerable to disruptions, expanded India's options. In October, around 2.5 million tonnes of LNG have already arrived, with full-month imports expected to reach a record 2.8 million tonnes, marking an 18% increase year-on-year.

The gap between India's gas demand and domestic supply is widening, as consumption has risen from 60 billion cubic meters in 2022 to 68.5 billion cubic meters in 2025. Domestic production has remained stagnant at around 3,436 billion cubic meters annually for the past four years. Additionally, a 4% year-over-year decline in September output, from 2.86 billion cubic meters to 2.73 billion cubic meters, has exacerbated the supply gap.

Consumption growth is primarily driven by two sectors: fertilizers, which account for around 29% of gas consumption, and city gas distribution, with 28.5%. Despite global price shocks, fertilizers remain a resilient demand, with the government prioritizing adequate supplies of urea and diammonium phosphate, especially in politically important regions.

The city gas distribution sector has seen a 20% increase in gas use, supported by wider network coverage and a growing customer base. The government has set a price floor of $4/MMBtu for the next two years, subsidizing a significant portion of industrial gas consumers while letting them be exposed to global prices.