The city gas distribution sector is expected to lead consumption growth in India between now and 2030, supported by rapid expansion of CNG infrastructure and competitive pricing against liquid fuels.
India’s natural gas demand is projected to grow by nearly 60% by 2030, bringing the country’s projected gas demand at par with some of the world’s largest consumers, the International Energy Agency (IEA) said on Wednesday.
The agency released its report on India’s gas market outlook to 2030 during India Energy Week here. According to the report, the country’s gas consumption is set to reach 103 billion cubic metres (bcm) annually by the end of the decade. “After more than a decade of slow growth and periodic declines, India’s natural gas demand is projected to grow by more than 10% in both 2023 and 2024, signalling a turning point,” it said.
“India’s gas market is entering a new phase of growth, supported by significant infrastructure development and clear policy direction,” said Keisuke Sadamori, IEA’s director of energy markets and security. The projected increase in gas demand is in line with the expected wave of new global LNG supply.
“However, careful planning and market coordination will be needed to ensure supply security and help gas compete in a price-sensitive market,” he added. The agency highlighted three key factors supporting this substantial growth – rapid infrastructure expansion, improving domestic production and an expected easing in global gas market conditions.
Infrastructure development is playing a key role in enabling the country’s market growth. Since 2019, India has nearly quadrupled its number of compressed natural gas (CNG) stations and more than doubled the number of residential gas connections, while expanding its transmission pipeline network by 40%.
The IEA expects the number of CNG stations and residential connections to nearly double by 2030, with the gas transmission grid expanding by an additional 50%. The urban gas distribution sector is expected to see the biggest growth in consumption in India between now and 2030, supported by the rapid expansion of CNG infrastructure and competitive pricing compared to liquid fuels.
According to IEA estimates, demand in the heavy industry and manufacturing sectors is expected to increase by about 15 bcm during this period, while gas use in oil refining is forecast to increase by more than 4 bcm as more refineries are connected to the network. The country’s domestic gas production, which meets 50% of demand in 2023, is projected to grow gradually, reaching just under 38 bcm by 2030, up about 8% from 2023 levels.
“Limited growth in domestic supply means that India’s LNG imports will need to more than double to about 65 bcm annually by 2030 to meet rising demand,” the report said. The country wants to increase the share of gas in its energy mix from the current 6% to 15% by 2030.
“The report identifies the potential for even greater growth under an accelerated scenario, where targeted policy measures could boost total demand to about 120 bcm by 2030 – comparable to the current gas consumption of South America,” the IEA said. Additional policy support would be needed to support greater use of gas-fired power plants, faster adoption of LNG in heavy-duty transport and more rapid expansion of city gas infrastructure, it said.
“As legacy contracts expire, India faces a growing gap between contracted supply and projected demand after 2028, potentially increasing the risk of spot market volatility until new long-term contracts are secured in the coming years,” the agency said.
