India’s annual liquefied natural gas (LNG) demand is poised to contract for the first time in years in 2025, as buyers hold off purchases in anticipation of increased production that is expected to drive down prices. According to ship-tracking data from Bloomberg, India, the world’s fourth-largest LNG importer, imported approximately 16 million tonnes of LNG from January to August 2025, a decline of 10% compared to the same period the previous year.
High spot prices have made LNG less competitive compared to alternative fuels, contributing to the slowdown in purchases. Additionally, cooler weather brought on by monsoon rains has diminished power demand. This reduction in demand provides some relief to a global gas market that has remained tight since Russia’s invasion of Ukraine in 2022 prompted greater reliance on LNG in Europe, heightening competition for supplies in Asia.
Looking toward 2026, a rebound in LNG imports is anticipated due to an impending supply glut that should push prices lower. Facilities in the U.S. and Qatar are set to begin operations in 2026, increasing supply beyond anticipated demand growth for the remainder of the decade. Kaushal Ramesh, vice president for gas and LNG research at Rystad Energy, indicated, “We expect the dip in 2025 is a temporary price-driven phenomenon. The years ahead will see more contracts ramp up and also lower spot prices.”
Data from India’s oil ministry reveals a sharp decline in demand for gas across industries, refineries, and the fertilizer sector this year, primarily attributed to high pricing. Asian spot LNG prices have remained above $11 per million British thermal units, a threshold often deemed prohibitive for price-sensitive Indian buyers.
Nevertheless, Rystad projects India’s annual LNG demand could surpass 40 million tonnes by 2030, compared to approximately 26 million tonnes in 2023. The Indian government is advocating for increased gas usage among industries and households as a means of reducing reliance on more polluting fuels. Current gas demand in India, which relies on imported LNG to supply half its needs, is expected to reach as much as 365 million cubic meters per day by 2030, nearly double the present levels.
India faces challenges in reaching its target of approximately doubling the share of natural gas in its energy portfolio to 15% by 2030, a goal that necessitates greater imports. Investor confidence remains strong, with LNG producers investing in multi-billion-dollar export facilities. Long-term supply agreements are also being negotiated as the predicted supply surplus is expected to drive prices down.
In preparation for the anticipated increase in gas demand, major importers such as Gail India Ltd. and Petronet LNG recently engaged in discussions with suppliers about long-term supply contracts during the Gastech event in Milan. Additionally, Shell Plc sought environmental approval last month to significantly expand its LNG import terminal on India’s west coast, while Invenire Energy Pvt. received permission to construct a new facility on the east coast.
This year’s decline in demand does not alter India’s fundamental role as a key long-term growth driver in the global LNG market, according to Akshay Gupta, a research analyst focusing on gas and LNG markets at Wood Mackenzie.
The article was published on September 16, 2025.
