India's Natural Gas Consumption Drops 6.5% in Q1 FY27 Amid Costly LNG Imports

India's natural gas consumption fell 6.5% year-on-year to 16 billion cubic metres (bcm) during the April-June quarter, according to The Economic Times report, citing oil ministry data.  

The decline was driven by lower LNG imports and reduced domestic production, which together limited gas availability. LNG imports stood at 7.7 bcm, down 8.6% from the same period last year, while domestic production fell 4.3% to 8.3 bcm. 

India imports nearly half of the natural gas it consumes, making domestic demand sensitive to changes in international LNG prices and supply conditions. 

Higher LNG Prices Weigh on Imports 

LNG imports became costlier after the Iran conflict disrupted supplies from the Gulf region. Qatar, India's largest LNG supplier under long-term contracts, faced supply disruptions, prompting buyers to arrange cargoes from alternative sources. Spot purchases increased even as prices remained elevated. 

The Japan-Korea Marker (JKM), the benchmark for Asian spot LNG, averaged $20 per million British thermal units (mmbtu) in March, compared with $10.7 per mmbtu in February.  

It averaged $16.9 in April, $18.3 in May, and $16 in June. Fresh tensions involving the US and Iran have again pushed the benchmark above $20 per mmbtu. 

Domestic Production Continues to Ease 

Lower domestic output added to supply constraints during the quarter. Production from private-sector fields declined 7.5%, mainly due to lower output from Reliance Industries' KG basin blocks.  

Production by state-run companies fell 2%. Private operators contribute about 37% of India's domestic natural gas production. 

Most of India's LNG is imported under long-term contracts linked to crude oil prices, while supplies from the US are indexed to the Henry Hub benchmark.  

Henry Hub prices remained comparatively stable during the period, making US cargoes relatively more competitive despite higher freight costs. 

Read More: Government Has No Plans to Increase Ethanol Blending in Petrol Beyond 20%, Says Centre! 

Conclusion 

India's gas consumption fell in the first quarter of FY27 as domestic output and LNG imports declined simultaneously. Elevated global LNG prices added to supply constraints during the period. 

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