India's gas demand returns to pre-disruption levels, but global LNG competition rises: Report

India's natural gas consumption demonstrated a significant recovery in June, nearing pre-disruption levels with a 2% year-on-year increase to 197 million metric standard cubic meters per day (mmscmd). This rebound was broad-based, with demand growth observed across crucial sectors, according to a report by Equirus.

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India's natural gas consumption recovered to near pre-disruption levels in June 2026, with broad-based demand growth across key sectors, even as rising global LNG competition and elevated spot prices could pose risks to the outlook, according to a research report by Equirus.

Excluding power generation, consumption rose by 4% year-on-year to 176 mmscmd, indicating a strengthening underlying demand. The recovery was primarily fueled by imported gas, as liquefied natural gas (LNG) consumption saw a substantial 10% year-on-year jump to 110 mmscmd. This surge in imports pushed India's overall import dependence for natural gas to 56%, as domestic supply remained stagnant and declined 8% year-on-year.

Demand growth in June was notably widespread, with city gas distribution (CGD) leading the increase, followed by miscellaneous users and refineries. CGD consumption rose by 2.3 mmscmd month-on-month, while miscellaneous demand saw a 3.9 mmscmd increase. Refinery consumption also improved, supported by a significant rise in imports.

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This revision has altered the demand narrative, suggesting that the recovery was already stronger than initially estimated.

However, the report cautions that rising global LNG competition and elevated spot prices pose potential risks to India's energy outlook. Asian spot LNG prices exceeded $19 per million British thermal units in July and are currently above $20, with European gas storage levels below historical averages. This heightened competition, particularly from China's strong LNG buying, could impact the availability and price of cargoes for India.

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The domestic brokerage firm expects July demand to remain strong, although slightly softer than June due to lower power consumption.

Despite these challenges, India's LNG sourcing has diversified. The country imported approximately 7 million tonnes from May to July, a 15% year-on-year increase, even with a sharp drop in volumes from Qatar. The United States has emerged as the largest supplier, followed by Nigeria and Oman, reducing India's immediate reliance on Qatar. While new global LNG projects are expected to increase supply, factors like shipping constraints, sanctions, and payment risks will continue to influence whether India can secure incremental supplies at competitive prices.

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However, Equirus cautioned that stronger Chinese LNG buying is increasing competition for flexible cargoes.