India’s gas story losing steam? Why high LNG prices are a worry for Gujarat Gas, IGL, MGL — but boosting GAIL
India’s gas market is showing signs of strain, and the latest note from brokerage group JM Financial makes it clear why. Demand has flattened, domestic output is slipping, and expensive LNG in Asia is hurting the very companies expected to expand gas consumption. A recent report by JM Financial highlighted how elevated spot prices are changing margins across city gas distributors, transmission firms, and importers, while only those with Henry Hub-linked contracts are finding some breathing room Henry Hub is the US reference point for natural gas prices. When LNG is sold from America, the price is often linked to Henry Hub. As per the report, US Henry Hub prices have stayed around $3–3.5/mmbtu, far below Asian spot LNG at $11–13/mmbtu. This gap makes Henry Hub-linked cargoes significantly cheaper on a delivered basis, which explains why GAIL, with its US-linked contracts, is better placed than city gas distributors that rely more on spot LNG. At the most basic level total gas demand in August 2025 stood at roughly 190 mmscmd, a drop of about 1.2% from a year earlier. The Jul–Aug average for FY26 to date was only marginally higher at 192 mmscmd, down 1.0% YoY. Domestic consumption slipped further about 92 mmscmd in the first two months of the quarter, falling 4.7% YoY while LNG deliveries accounted for nearly 99 mmscmd in August. The numbers show a market not in expansion but in a cautious holding pattern, the report revealed. Demand and supply dynamics The report’s demand and supply data point to a market stuck in place. Demand is hovering near 190–192 mmscmd, domestic production keeps sliding lower, and LNG imports are not picking up because high spot prices make them unattractive. To put it simply, India’s gas story is stagnating under the twin weight of expensive imports and weaker local output. Costs and pricing gaps Costs is at the heart of the stress. Asian spot LNG is trading around $11–13/mmbtu, far above the long-term norm tied to crude. The comparison with other benchmarks is stark: US Henry Hub-linked cargoes land at a much cheaper rate, while crude-linked contracts sit somewhere in between. This pricing spread is crucial; it explains why companies tied heavily to spot supply are losing ground, while those with Henry Hub-linked volumes, such as GAIL, are benefiting from lower landed costs, the report added Global supply outlook Another important set of numbers in the report highlights global capacity additions. Nearly 210 mmtpa of new LNG liquefaction capacity is expected to come online from 2026 onward, led by projects in the US, Qatar, Russia and Canada. The implication is clear: if these projects materialise on time, spot prices could ease and demand may recover. Until then, India’s buyers will continue to pay more for their cargoes. JM Financial on Indian gas market: Spotlight on key companies Gujarat Gas: The report calls Gujarat Gas vulnerable. Roughly 20–30% of its volumes come from spot LNG, which means when spot is high the company has little choice but to absorb the cost. For a distributor serving price-sensitive industries, that is a serious disadvantage. Gujarat Gas is effectively paying more for gas that competitors in other fuels can undercut. Indraprastha Gas (IGL): Indraprastha Gas faces another problem i.e reduced allocation of cheaper APM gas. As the JM Financial report, less APM means IGL has to buy more expensive market-priced volumes to keep CNG pumps running. The economics of CNG, which drive much of its business, weaken as a result Mahanagar Gas (MGL): Mahanagar Gas is in the same boat as IGL. Allocation changes force it toward higher-priced volumes. For a city gas distributor whose bread and butter is CNG and household PNG, sustained high spot LNG is a direct hit on margins, the JM Financial report added. GAIL: GAIL, by contrast, stands out in the report as more resilient. Its Henry Hub-linked LNG contracts are proving profitable at current spreads. The company’s portfolio and trading flexibility allow it to capture gains that others cannot. The caveat is clear though if Henry Hub rises sharply, the advantage could vanish. The report cited nearly 210 mmtpa of new LNG liquefaction capacity expected from 2026 onwards, with major projects in the US, Qatar, Russia and Canada. The bars rise steeply after 2026. This is the hope that more supply could drag spot prices back toward historical norms. But until those projects come online, India remains exposed to costly cargoes. Petronet LNG: Petronet LNG appears in the note as the key regasification player. Its long-term RasGas contract, priced off crude, offers a different cost profile than spot cargoes. But when overall demand is weak, terminal utilisation drops. The JM Financial report notes a decline in regas use during this high-spot period, which caps revenue for Petronet despite its contract base. Gujarat State Petronet (GSPL): For GSPL, the issue is transmission volumes. Lower LNG demand and weaker industrial uptake mean less gas flowing through pipelines. While fixed fees provide some stability, variable throughput-linked income takes a hit, the report added. JM Financial on Indian gas market: Risks and signals: The report identified clear risks. Execution delays in the global capacity buildout could prolong high spot prices. European storage dynamics and geopolitical shifts add uncertainty. On the domestic side, further slippage in production would increase import dependence. Investors, the report suggests, should keep an eye on JKM levels, Henry Hub, India’s monthly output data, regas utilisation, and APM allocation decisions. Each will decide whether margins worsen or improve in the months ahead.
PNGRB report maps step-wise hydrogen blending: 2% safe, 20% only with new infra
India’s petroleum and gas regulator has drawn up a roadmap for phased hydrogen blending in natural gas pipelines, setting safe thresholds, and benchmarking global pilot projects as reference models for domestic rollouts. According to a report prepared jointly by the Petroleum and Natural Gas Regulatory Board’s (PNGRB’s) Hydrogen Cell and ICF Consulting India, hydrogen blending of up to 2 per cent can be introduced without requiring changes in appliances and is safe in all networks. It said that blending in the range of 2–5 per cent is suitable for early-phase pilots provided continuous monitoring is in place. For 5–10 per cent blends, operators would need pre-approved materials and leak detection systems. The report added that blending of 10–20 per cent hydrogen would require certified appliances, standard operating procedures, and structured risk mitigation protocols. “Above 20 per cent is only feasible in new networks or after infrastructure adaptation,” the document stated. Blending criteria highlighted in the report include pipeline material compatibility, age and condition of networks, sensitivity of end-users such as hospitals and food processing units, and geographical differences between urban and rural networks
Union Minister Hardeep Singh Puri announces discovery of natural gas in Andaman Sea
In a significant development, Union Petroleum Minister Hardeep Singh Puri has announced that natural gas has been discovered in the Andaman basin, confirming the long-held belief that the Andaman Sea is rich in natural gas. In a social media post last night, the Minister said, an ocean of energy opportunities has opened up in the Andaman Sea. Expressing happiness, Mr Puri informed about the occurrence of natural gas in the Sri Vijayapuram 2 well at a distance of 9.20 Nautical mile (17 km) from the shoreline on the east coast of the Andaman Islands at a water depth of 295 metres and target depth of 2,650 metres. He said, initial production testing of the well in the range of 2212 – 2250 meters has established the presence of natural gas with intermittent flaring. He further stated that the gas samples were brought by ship to Kakinada, were tested and found to be 87 per cent methane. According to the Minister, the size of the gas pool and commercial viability of the discovery will get verified in the coming months but establishing the presence of hydrocarbons in the Andaman basin is a major step in confirming their long-held belief that Andaman basin is rich in natural gas, in line with discoveries in the entire area from Myanmar in North to Indonesia in the south in this belt. Mr Puri said, under the deepwater mission announced by Prime Minister Narendra Modi on Independence Day last month, large number of deepwater exploration wells are planned in our offshore basins in order to find new discoveries and fully exploit our hydrocarbon reserves. He emphasized that the occurrence of natural gas will help the country take forward its exploration ambitions in coordination with global deepwater exploration experts, and will be a significant milestone in India’s journey through Amrit Kaal.
India plans higher oil and gas imports from US
India is working on expanding energy imports from the US while pushing for reduced tariffs on its own exports, signalling a trade strategy that places energy security at the core of negotiations. Commerce Minister Piyush Goyal, who is currently in New York, confirmed that India expects to raise its purchases of US oil and gas. The move comes just weeks after President Donald Trump imposed 50% tariffs on Indian exports, a decision aimed partly at penalising New Delhi for continuing to buy Russian crude. The development has added a new dimension to the evolving India-US trade relationship. Energy trade to balance tariffs Goyal told an event in New York that India and the US, as “close friends and natural partners,” would see energy play a growing role in bilateral trade. The minister highlighted that the world’s third-largest oil consumer is seeking stability in supplies, and Washington is expected to have a central role in diversifying India’s energy security goals. The Trump administration has argued that India is helping to fund Russia’s war in Ukraine by being the largest buyer of Russian seaborne crude. The discounted barrels have allowed New Delhi to manage its import bill, but they have also triggered pressure from Washington. By raising imports from the US, India aims to address Washington’s concerns, reduce trade imbalances, and strengthen its position in tariff negotiations.
LNG Poised To Disrupt Heavy Vehicle Fuel Market, Says IGL MD
Indraprastha Gas (IGL) is betting big on liquefied natural gas (LNG) as India’s next clean transport success story, drawing parallels with the transformation of compressed natural gas (CNG) over the last two decades. According to Kamal Kishor Chatiwal, Managing Director of IGL, even a modest shift from diesel to LNG in the trucking industry could trigger volumes rivalling a large share of today’s compressed natural gas (CNG) market. If even 10 per cent of the diesel used in medium and heavy commercial vehicles shifts to LNG, it can create demand of around 11–12 million metric standard cubic meter per day (MMSCMD),” Chatiwal said at LNG India Summit 2025. “To put that in perspective, CNG sales today are about 26-27 MMSCMD. We are looking at LNG contributing 30–40 per cent of CNG’s current consumption.” Chatiwal stressed that LNG’s adoption will be critical in meeting India’s goal of raising the share of natural gas in the energy mix from 6 per cent to 15 per cent. He said city gas distribution (CGD) companies like IGL will play a “major, major role” in that transformation. Trucking And Logistics In Focus India’s road freight sector is dominated by diesel-powered vehicles, consuming around 105 million litres annually in the MHCV category alone. Chatiwal underlined that converting just a fraction of this demand could unlock a transformative opportunity. He noted that LNG is well-suited for long-haul trucks and buses operating on India’s expanding network of expressways. “In the new India, where you have 1,000-kilometre-long super expressways like Delhi–Mumbai, LNG infrastructure can support efficient, cost-effective transport solutions,” he said. Drawing parallels with CNG, which faced scepticism two decades ago but is now a mainstream fuel in passenger vehicles, Chatiwal expressed confidence that LNG can follow a similar growth trajectory. “Almost 40 per cent of new passenger vehicles in NCR and nearby areas today are CNG-run. We believe LNG’s story can be no different if the right infrastructure is put in place,” he observed. Unlike CNG, which requires geographical authorisation to set up filling stations, LNG stations can be established anywhere in the country. This regulatory flexibility, he argued, makes LNG adoption easier, especially for large-scale commercial fleet.
No way out of Moscow: Why Indian oil companies’ $1.4 billion worth of dividends are stuck in Russia
Indian public sector oil companies are facing a $1.4-billion question: how to repatriate their dividend income that has been piling up in Russia for over three years now? The Indian government and the companies have been attempting to find a resolution, but success has so far eluded them. While they are confident that the money is safe, as dividends from their investment in Russian oil assets are being deposited at regular intervals in the companies’ accounts in an Indian bank in Moscow, they have been unable to access and use it. These stranded dividends originate from billions of dollars invested by Indian public sector oil companies over the years to acquire stakes in Russian producing oil and gas projects. These cumulative investments are estimated to be over $6 billion. This strategy forms a crucial part of India’s overall energy security plan, as India relies heavily on oil imports. The Indian companies include ONGC Videsh (OVL), the overseas investment arm of Oil and Natural Gas Corporation (ONGC). OVL holds a 20 per cent stake in the Sakhalin-1 project and a 26 per cent stake in the Vankor project. OVL’s share of the stuck dividends is close to $400illion. Then there is the consortium of Indian Oil Corporation (IOC), Oil India (OIL), and Bharat Petroleum Corporation (BPCL) arm Bharat PetroResources (BPRL), which together hold a 23.9 per cent share in Vankor and a 29.9 per cent share in the Taas-Yuryakh project. This consortium’s cumulative share of the stranded dividends is the larger portion, around $1 billion, according to industry estimates.
ONGC, BP plan to step up hunt for oil, gas in India’s deep-sea next year
Public sector upstream oil giant ONGC is poised to kick off the drilling of stratigraphic wells in India’s offshore basins at the beginning of next year as part of the country’s efforts to step up the search for oil and gas to enhance energy security and cut down on imports, a senior official has confirmed. The drilling, which will be carried out with the assistance of global oil and gas giant BP, will focus on the Andaman, Mahanadi, Saurashtra, and Bengal offshore sedimentary basins. The entire campaign will be carried out with an investment of Rs 32 billion. ONGC had signed an agreement with BP in July this year to form a partnership that will enhance geological understanding and unlock untapped hydrocarbon potential, strengthening India’s long-term energy security. BP’s experience in deep water exploration, supported by new seismic technologies, would be of great assistance during the well design and well location for the stratigraphic drilling. As part of the agreement, ONGC will be putting in money, while BP will provide expertise. The stratigraphic drilling will focus on understanding the geology of the offshore basins and identifying potential hydrocarbon resources which can be taken up for oil and gas exploration in the future.
Citi sees Brent crude at $60 by year-end as OPEC+ ramps up production
Citi analysts on Friday forecast Brent crude oil prices would fall to $60 per barrel by year-end and average $62 per barrel between the second and fourth quarters of 2026, citing OPEC+ production increases and China’s stockpiling. The bank revised its global liquids balance outlook after OPEC+ announced plans to unwind an additional 1.6 million barrels per day (mb/d) of voluntary cuts starting in October 2025. Citi said that could lead to stock builds of 1.1 mb/d in 2025 and 2.1 mb/d in 2026, adding slack to an already-loosening global supply. By end-2026, Citi estimates global liquids inventories could climb to 10.9 billion barrels, equivalent to 103 days of forward demand cover. Under a bear case scenario, Citi assigned a 30% probability of Brent prices falling below $60 per barrel, potentially to $50, on weaker global demand, faster growth in non-OPEC supply, and lower compliance among OPEC+ members. Its bullish scenario, with a 10% probability, could push Brent prices above $75 on increased geopolitical disruption. Global oil demand is expected to grow by 0.7 mb/d in 2025 and 1 mb/d in 2026, though trade disputes could trim diesel consumption by as much as 0.3 mb/d. Citi reaffirmed its Brent target of $60 per barrel over the next 6 to 12 months. Brent crude futures were trading at $66.93 a barrel by 1024 GMT while U.S. West Texas Intermediate futures at $62.92.
Switching LPG connections the mobile telephony way, PNGRB seeks views
Can households draw cooking gas connections from another distributor or PSU oil company other than one catering to them just like the how it works in the mobile telephony space? Imminently so, with Petroleum and Natural Gas Regulatory Board inviting stakeholder and consumer comments for an LPG interoperability framework. Behind the move are persistent consumer grievances — more than 1.7 million annually as a high-level expert committee noted recently — primarily relating to delay in getting liquefied petroleum gas refills, PNGRB said in a public notice. Seeking to highlight the importance of such a framework, the regulator said while the oil marketing companies do strive to address customer grievances, the consumers do not have option of migrating from one OMC/LPG dealer to another. While the interoperability has been adopted in telephony with much success, the same has not happened in LPG sector,” it said. Citing reports that highlighted supply disruptions and prolonged delay in refill deliveries, either due to operational constraints or suspension of the distributorship, the regulator said safeguarding consumers against service failures and ensuring uninterrupted access to this essential fuel is necessary. There may be other reasons too – consumer’s freedom of choice on the LPG company/dealer being one, especially when the cylinder price is same. PNGRB said it was seeking measures to facilitate timely access to refills — by enabling consumers to be served from the nearest available distributor through improved coordination and flexible delivery arrangements within the existing network, particularly during times of disruption. While porting of LPG connections by consumers was discussed in the past, the measure was given up. Moving over to another distributor or company involve surrendering the equipment and some cost to the consumers. When it is done during times of disruption and as a temporary measure there will practical issues, especially on how refills and pressure regulator, which differ from one company to another, are deposited to the concerned company, sources in the industry said. PNGRB, however, seem to view LPG interoperability framework as a solution. India has achieved near-universal LPG household coverage with over 320 million connections as of 2024-25. This is a commendable achievement of the OMCs. However, consumer grievances remain, it said.
India’s crude oil output slips 0.6% in Aug; import bill falls to $9.4 bn
India’s crude oil and condensate production fell 0.6 per cent to 2.4 million metric tonnes (MMT) in August 2025 while the country’s net oil and gas import bill declined to USD 9.4 billion from USD 11.4 billion a year earlier, according to data from the Petroleum Planning and Analysis Cell (PPAC). Of the total domestic output, 75.3 per cent came from nomination fields, 13.7 per cent from pre-NELP fields and 10.8 per cent from NELP fields Crude oil processing rose 3 per cent year-on-year to 22.3 MMT in August. State-run and joint venture refiners processed 15 MMT, while private refiners handled 7.3 MMT. Out of the total, 2.2 MMT was indigenous crude and 20.1 MMT imported. For April–August of the current fiscal, crude processing grew 1.8 per cent compared to the same period last year. Crude oil imports declined 2.9 per cent in August but were up 0.7 per cent in April–August. Imports of crude were valued at USD 9.9 billion, LNG imports at USD 1.2 billion, while exports of petroleum products were USD 3.5 billion in August. Brent crude averaged USD 68.21 per barrel in August compared to USD 70.99 in July and USD 80.91 in August 2024. The Indian basket crude price averaged USD 69.11 a barrel in August against USD 70.95 in July and USD 78.27 a year earlier.