India has significantly increased spot Liquefied Natural Gas (LNG) imports as rising fertiliser production, higher electricity demand, and supply disruptions from the Middle East put pressure on domestic gas availability.
The move comes ahead of the monsoon sowing season when fertiliser consumption typically rises sharply.
Fertiliser Sector Driving LNG Demand
Natural gas is a key feedstock for urea production, making LNG imports critical during the agricultural season.
LNG Purchases for Fertiliser Production
Period Spot LNG Cargoes per Month
Before Middle East Disruptions Less than 1 cargo
Current Level Around 6 cargoes
The increase reflects efforts to ensure uninterrupted fertiliser production as farmers prepare for the kharif cropping season.
State-Owned Companies Return to Spot Market
Several public-sector energy companies have resumed spot LNG purchases, including:
Indian Oil Corporation
Gujarat State Petroleum Corporation
These firms are seeking cargoes for June and July delivery after reducing purchases earlier in the year when global LNG prices surged.
Supply Disruptions Add Pressure
India’s LNG procurement strategy has also been influenced by disruptions affecting key suppliers.
Before the recent geopolitical tensions:
Qatar
United Arab Emirates
collectively supplied approximately 57% of India’s LNG imports.
Any disruption from these regions has a direct impact on India’s energy security and import planning.
Power Sector Gas Demand Rising
Extreme temperatures and increased electricity consumption have boosted gas-fired power generation.
Gas-Based Power Output
Period Generation
First Week of May 383 million units
First Week of June 651 million units
This represents a substantial increase in gas consumption by power producers.
Household Gas Consumption Continues to Expand
India’s growing city gas distribution network is also contributing to higher natural gas demand.
Residential PNG Expansion
Metric Numbers
New Connections Since March 916,000
Additional Connections Ready 305,000
Total Residential PNG Connections (March 31) Nearly 17 million
The expansion of piped natural gas infrastructure continues to support long-term demand growth.
Cost Impact of Spot Purchases
Current spot LNG prices remain significantly above long-term contract prices.
LNG Source Price
Spot Market $18–$19 per MMBtu
Long-Term Contracts Around $13 per MMBtu
Despite the higher cost, India has increased purchases to secure supplies and maintain fertiliser and power production.
Sectors Likely to Benefit or Remain in Focus
The increased LNG imports may keep the following sectors in focus:
Fertilisers
City gas distribution
Gas transmission
LNG import infrastructure
Gas-based power generation
Companies such as Indian Oil Corporation, GAIL (India) Limited, Petronet LNG Limited, and Gujarat State Petroleum Corporation may remain closely watched as LNG procurement activity increases.
Conclusion
India has accelerated LNG imports to meet rising demand from fertiliser plants, power generators, and residential consumers while offsetting supply disruptions from key Middle Eastern suppliers. Although spot LNG remains substantially more expensive than contracted supplies, ensuring energy availability during the monsoon season and peak demand periods has become a priority for the country
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