India's gas consumption to reach 113.7 bcm by 2040

Key factors include population growth and economic development.

India's natural gas consumption is projected to rise dramatically, nearly doubling from 65 billion cubic meters (bcm) in 2023 to 113.7 Bcm by 2040, according to a recent report by Rystad Energy.

The report said the surge is driven by factors including population growth, economic development, and a transition toward cleaner energy sources.

In the near term, domestic gas production is expected to increase by 51%, reaching 36.7 bcm by 2025. However, this boost will not suffice to meet the surging demand, leading India to continue its heavy reliance on gas imports to satisfy its future energy requirements.

To secure its energy supply, India has signed long-term contracts extending into 2030 and beyond. These agreements aim to protect against global price fluctuations and ensure a steady gas supply, strengthening India's position in the liquefied natural gas (LNG) market.

Currently, gas accounts for only 2% of India's power mix, as the country continues to rely heavily on coal, especially during recent heatwaves. Coal-generated power is not expected to decline significantly until after 2040.

Whilst gas demand in the power sector may grow, the report said it will depend on future policies promoting coal-to-gas switching or implementing carbon pricing.

“Looking ahead, a strategic next step could involve continued dealings with the Middle East,” said Kaushal Ramesh, vice president of Gas & LNG Research at Rystad Energy. “The geographical proximity of the two regions, combined with the substantial volume of uncontracted LNG production in the Middle East, presents an excellent opportunity for India to secure favorable terms – it’s an ideal buyer-seller relationship that could help fuel India’s needs.”

He noted that nearly 100 million tonnes per annum of Middle Eastern LNG remain uncontracted by 2035, positioning India as an attractive market for producers in the region.