How India became the world’s most nimble energy buyer

India is gearing up to meet the country’s ever-expanding energy needs. (Bloomberg)
India is gearing up to meet the country’s ever-expanding energy needs. (Bloomberg)


With a rapidly growing population and economy, India is thirsty for oil and natural gas—at the right price.

Global energy markets have been on a roller coaster for the past few years. While major industrial economies have been thrown for a loop, India, facing record import needs on a tight budget, is almost enjoying the ride.

A deal signed this month is the latest indication that the world’s most populous country, still a distant third in energy consumption but growing quickly, is handling its entry into the big leagues with aplomb.

Government-owned Petronet renewed a contract to buy 7.5 million tons of liquefied natural gas annually from Qatar from 2028 for 20 years in one of the largest-ever deals for the super-chilled fuel. India is looking to sign more such long-term LNG supply contracts as demand grows.

While the pricing terms weren’t disclosed, the deal comes at an opportune time, when LNG prices have crashed from the highs seen after Russia invaded Ukraine in early 2022. 

According to data shared by Argus Media, prices for LNG delivered to India averaged $13 per million British thermal units in 2023—sharply lower than an average of $30 in 2022. Currently, Asian natural-gas prices are lingering around $8.50, according to Refinitiv.

This megadeal is another example of India’s emergence as a large energy buyer in the global market as it gears up to meet the country’s ever-expanding energy needs. It has shown an ability to quickly clinch deals when prices drop in the face of geopolitical or economic disruption.

India’s aggressive purchases of cheap Russian oil have angered many in the West, but saved its refiners and consumers money. Before that, India was a major purchaser of crude from relatively nearby Iran, which also faced sanctions.

Raghav Mathur, an analyst at Wood Mackenzie, said that the move by India to renew the contract with Qatar during a time of softer prices is a smart one since it sets a base for future contracts. 

This agility is especially critical in light of the absence of sufficient oil and gas reserves at home, the growing air-pollution crisis and increasing pressure globally to diversify away from coal.

A study by the University of Chicago’s Energy Policy Institute found that India accounted for 60% of the increase in global air pollution between 2013 and 2021. And pollution is a potent domestic concern, too. India’s fuel mix, along with other factors, has made air in the capital, New Delhi, among the least healthy in the world.

Being green is particularly expensive for developing countries, though. Indian buyers have increased their exposure to long-term contracts, according to Mathur, to reduce exposure to erratic swings in energy prices. 

A focused effort to secure long-term supply also points to India’s increasing sophistication as an energy dealmaker versus moving in only when the opportunity arises.

Nimble energy dealmaking is important as India embarks upon industrializing its economy, upgrading its infrastructure and staking its claims as an alternative to China’s factory floor. It wants to lift the share of natural gas in its energy mix to 15% by 2030 from about 6% at the end of 2023. 

India is now the world’s largest LNG buyer after China, Japan and South Korea, and imports about 45% of natural gas used in the country. It could move to number three by the 2030s, according to Wood Mackenzie, which said the demand for LNG from India could cross 90 million metric tons per annum by 2050 from just over 20 million in 2023. 

With 85% of crude oil imported, it hopes to use natural gas as a generation fuel for electric vehicles or directly in compressed form to replace some of that in the transportation sector.

And even while India is hungry for energy, it is often a price-sensitive buyer. India’s record annual LNG imports of 26 million metric tons occurred during the first year of the Covid-19 pandemic in 2020, according to Anu Agarwal, Asia head of liquefied petroleum gas at Argus Media, when weak global demand pulled down spot prices to as low as $2 per million British thermal units. 

India absorbed surplus supply over the year as European and northeast Asian buyers stepped back from the global market. Imports fell sharply in 2022 when prices shot higher.

The same opportunism was on display in 2022 and 2023, when the world shunned energy imports from India’s long-term ally Russia, which contributed more than 35% of India’s total crude imports in 2023, according to S&P Global Commodity Insights data. 

When China banned Australian coal in late 2020, affordable coal found its way to India. Shipments from Australia to India grew more than 500% in the first three quarters of 2021, according to S&P.

Balancing energy security, sustainability and affordability is no mean feat. The Indian elephant is walking the tightrope with grace.

How India Became the World’s Most Nimble Energy Buyer
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How India Became the World’s Most Nimble Energy Buyer
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