India’s natural gas production is expected to peak in the current calendar year, after which it is likely to decline at a rate of 3.6 per cent annually until 2030, Wood Mackenzie said in a report.
Besides, falling production amidst rising demand for the commodity—considered the best transition fuel—is expected to push up imports. India is likely to become the world’s third largest importer of liquefied natural gas (LNG), after China and Japan, by 2032, with inbound cargoes accounting for 75 per cent of its gas consumption.
“We expect Indian domestic gas production to increase by 4.5 per cent and peak in 2025, then decline by an average 3.6 per cent annually over the next five years, due to structural declines in mature fields and delays in development of new projects,” the consultancy said.
Falling production
After 2030, production is expected to see a 9 per cent annual decline through 2040, driven by the exhaustion of mature fields and slower-than-expected discoveries, Wood Mackenzie said.
“The narrative could change, however, if the Oilfields (Regulation and Development) Amendment Bill introduced in August 2024 is implemented effectively,” it added.
The bill aims to increase investment in oil and gas exploration and production. Key ultra-deepwater discoveries, such as UD-1 in the eastern offshore basin, could transform India’s gas landscape in the future, contingent on favourable policies, faster project execution and advanced exploration techniques.
Exploration and production blocks‒OALP-VIII and OALP-IX‒were tendered in recent licensing rounds, but the participation of private players and international oil companies was muted, it pointed out.
Rising imports
India’s LNG imports totalled 26 million tonnes per annum (mpta) in 2024, accounting for more than half of the country’s gas consumption.
“We expect LNG demand to continue to grow in the coming years, exceeding 37 mtpa by 2030 and 88 mtpa by 2050, as India’s demand for gas rises while its domestic production shrinks. By 2032 already, LNG should account for around two-thirds of India’s gas consumption and will become the third largest importer of LNG after China and Japan,” Wood Mac said.
LNG consumption saw a whopping 11.5 per cent compound annual growth rate (CAGR) from 2022 to 2024, thanks to lower prices, a rise in industrial demand, subsidies for the Fertiliser sector and changes to pipeline tariff mechanism. Industrial gas demand, primarily from the fertiliser and refinery sectors, alone posted a 9 per cent CAGR in 2022-24.
Greater gas availability for new industrial units and the potential expansion of refineries and petrochemical plants will boost Indian industrial gas demand to around 63 billion cubic meters (bcm) by 2040, it projected.
Sizeable growth will come from the city gas distribution (CGD) sector, which includes the transport, residential, and commercial segments, as well as small industries. The CGD sector’s share of the gas consumption mix is expected to increase from 25 per cent to 32 per cent by 2030.
In 2024, Indian LNG buyers sought to renew and sign new long-term LNG supply and purchase agreements (SPAs) for a total of 14.7 mtpa. Spot LNG imports almost doubled to more than 110 cargoes during the year to plug the gap between rising demand and shrinking production.
“While the contractual LNG volume sat at around 22 mtpa in 2024, it will surpass 27 mtpa in 2026 with the addition of the SPAs signed in 2024. The need to sign further long-term LNG contracts will be key to securing supply,” Wood Mac said.
