India’s natural gas demand is expected to fall roughly 8 per cent y-o-y in 2026, with the fertilizer sector likely to post the steepest decline, as the West Asia conflict and the closure of the Strait of Hormuz (SoH) almost choked off half of the liquefied natural gas (LNG) imports from the Middle East and Gulf (MEG) region.
The International Energy Agency (IEA) in its latest Q3 2026 gas market report anticipates that the world’s fourth largest LNG importer’s natural gas demand is likely to decline around 8 per cent y-o-y in 2026.
However, the IEA pointed out that despite a significant softening in gas demand, India’s weak domestic gas production kept LNG imports up on the year.
The West Asia conflict has significantly altered, albeit temporarily, India’s LNG consumption dynamics, and supply sources.
For instance, in February 2026, the IEA projected India’s total natural gas consumption to hit 103 billion cubic meters per year (bcm/yr) by 2030. “This represents a nearly 7 per cent annual average growth rate between 2023 and 2030, far in excess of the previous five years’ CAGR of less than 2 per cent,” it had said.
Softening demand
Between January and April 2026, India’s natural gas demand declined 4 per cent y-o-y, reflecting strong price sensitivity across key consuming sectors. Demand trends diverged by end use.
“Fertilizer production recorded the largest absolute decline, falling more than 0.4 billion cubic meters (bcm), or 7 per cent y-o-y, despite its designation as critical to agricultural productivity and food security under the Natural Gas (Supply Regulation) Order 2026, issued by the government in early March 2026, shortly after the de facto closure of the SoH, IEA pointed out..
Petrochemical output also contracted sharply, by 21 per cent y-o-y. By contrast, gas use in the residential and commercial sectors—mainly city gas distribution (CGD) for compressed natural gas (CNG) in transport and piped natural gas (PNG) for households and small industry — increased around 12 per cent y-o-y.
The IEA projected that Asia’s natural gas demand is expected to decline by 0.5 per cent in 2026 as higher LNG prices spur gas-to-coal switching in power sector and lead to lower operating rates across gas- and energy intensive industries.
Faltering production spurs imports
The IEA noted that India’s domestic gas production remains on a declining trend, recording 22 consecutive months of year‑on‑year contraction since July 2024 and falling 4 per cent y-o-y in 2026.
Against this backdrop, LNG imports totalled around 11 bcm over the period, up 1 per cent y-o-y despite the West Asia supply disruption, it added.
Supply sources became more diversified in 2026. For instance, imports from Africa almost tripled compared with the same period in 2025, while deliveries from North America increased 70 per cent y-o-y, more than offsetting the 40 per cent decline in imports from the West Asia.
Monthly inflows were volatile, with strong deliveries in January, followed by declines in March (down 16 per cent y-o-y) and April (down 7 per cent y-o-y) amid the onset of the Middle East supply disruption, before rebounding in May (up 7 per cent y-o-y), it pointed out.
Published on July 11, 2026
