New Delhi: India has secured adequate supplies of liquefied natural gas (LNG) to meet demand till September by widening the sourcing of the fuel from the US, the United Arab Emirates (UAE) and Angola following Iranian attacks on Ras Laffan Industrial City in Qatar, the world's largest LNG production and export hub.
The development is significant for the world’s fourth-largest LNG importer. Gas supplies to India were a serious concern after the US-Israel war on Iran broke out on 28 February, forcing the government to restrict industrial use.
LNG in India is used mainly by fertilizer manufacturers, in city gas distribution and as a transport fuel. The curbs on industrial use have gradually been eased although there are no signs of peace in West Asia in the near future.
“The state-run oil and gas companies and refiners have two months of supplies already tied up. So, in the near term, any crunch is not expected,” said an official aware of the developments.
The US has emerged as a major supplier of LNG to India over the past few months, while West African countries including Angola and Nigeria have also become key sources of the energy commodity for India.
The US was the top supplier of LNG to India during the April-May period, with cargoes valued at $728.29 million, an over threefold increase from $199.92 million a year ago, data from the ministry of commerce and industry showed.
The other key suppliers were Nigeria ($580 million), Oman ($517.9 million), Angola ($301 million) and Trinidad ($142.56 million). Before the war, Qatar supplied about 50% of India’s LNG requirements, followed by the UAE, the US and Oman. Oman and the UAE are the only primary West Asian suppliers now.
QatarEnergy stopped producing LNG and declared force majeure after Iranian missile attacks on Ras Laffan Industrial City in March. Experts indicated that the damaged LNG facilities could take three to five years to repair. Qatar produces about 20% of the world's LNG.
Projected increase
With no end seen to the West Asian conflict in the immediate future, experts project US supplies to India will increase. However, there may be a supply crunch in the months ahead as Europe’s heating demand for winter gains momentum.
“We forecast the volume of US LNG exports to grow by approximately 10% year-on-year in winter 2025-26,” said Benjamin Gage, founder of Balance Point Research LLC, an LNG data-tracking firm. “While this will not completely replace the lost volumes from the Persian Gulf, the extra supply will help soften any weather-driven price volatility that occurs. It will also allow Indian buyers to bid into a wider pool of cargoes.”
The benchmark Japan/Korea Marker spot price of LNG was at $21.37 per mmBtu, about 60% higher than $13.36 in the pre-war period.
India’s LNG import bill was $13.4 billion in FY26, and while supplies declined to 7,674 million standard cubic metres (mmscm) from 8,396 mmscm during the first quarter of FY27, the import bill went up to $3.6 billion from $3.4 billion in the corresponding quarter of the previous fiscal.
“There is certainly a serious structural challenge for India in the medium to long term, though India’s management has been reasonably well in the short term, and securing alternative cargoes till September prevents immediate energy rationing or catastrophic industrial shutdowns,” said Harsh V. Pant, vice president at the Observer Research Foundation.
Pant, a professor of international relations at King's College London, noted that the main impact is financial rather than physical volume availability.
"QatarEnergy’s long-term contracts provided stable, predictable pricing. Now, replacing those lost volumes via flexible short-term cargoes or on the spot market comes at a massive premium, with Asian spot LNG prices surging. So, there is a higher fiscal burden whether you look at it from the fertilizer perspective or gas and industrial units' perspective," Pant said.
European concern
On winter demand from Europe and its impact on global prices, Gage of Balance Point said the surge in LNG prices during the past weeks reflects the European gas market's concern for the low level of underground gas storage in preparation for the coming winter.
"For the key LNG-importing markets of NW Europe (northwestern Europe), current underground storage inventory levels are approximately 10 BCM (billion cubic metres) below last year. The performance of temperatures in both NE Asia and in Europe, particularly in the fourth quarter, will guide prices for marginal LNG cargoes available to Indian buyers," Gage added.
Prices, which eased in mid-June amid peace talks and the interim deal between Iran and the US, have surged over the past two weeks. JKM Marker spot LNG prices increased from $16.80 on 15 July.
Ed Cox, global LNG editor at Independent Commodity Intelligence Services, a London-based commodity-tracking firm, said if the Strait of Hormuz remains closed for a longer period and LNG flows do not return till March 2027, gas prices at the Title Transfer Facility (TTF) may trade at higher levels than the current average of €61/MWh over the winter.
TTF, based in Amsterdam, is the reference virtual market for gas trading in Europe. The ICIS TTF front month traded at €58.9/MWh on Friday.
“Our base case scenario is that more Qatari volumes can be supplied from October, which would mean that critical European TTF gas prices would trade lower over the winter than at current levels (a winter average of about €55/MWh). This would mean that Asian spot LNG prices would likely also fall from current prices. We expect winter Europe gas and Asia spot LNG to trade at broadly similar levels,” Cox added.