India's Natural Gas Demand to Dip 2% in 2026 Despite LNG Import Surge
IEA predicts a 2% dip in India's natural gas demand for 2026, while LNG imports rise by 10% due to falling domestic production.
India is facing a paradoxical shift in its energy landscape. According to the latest Global Gas Security Review 2026 by the International Energy Agency (IEA), India natural gas demand is projected to decline by approximately 2 per cent year-on-year in 2026. This dip comes at a time when the country is actually increasing its reliance on foreign energy, with liquefied natural gas (LNG) imports climbing by 10 per cent.
The Import Paradox: Why Imports are Rising
While overall consumption is expected to slide, the volume of LNG entering the country has seen a significant jump. Between January and October 2026, LNG imports rose by nearly 3 billion cubic metres (bcm), representing a 10 per cent increase.
The IEA points to a critical internal issue: domestic gas production is weakening more rapidly than the overall demand is falling. As local sources dry up or underperform, India—historically a price-sensitive market—has been forced to turn toward international markets to bridge the gap.
Global Chaos and the Strait of Hormuz Crisis
The instability in India's gas market is not happening in a vacuum. The global energy sector has been rocked by a massive supply shock following the closure of the Strait of Hormuz, which the IEA describes as the largest supply shock in the history of the LNG market.
The impact of this closure was devastating for key suppliers:
- Delivered LNG supplies from the United Arab Emirates and Qatar plummeted by roughly 63 per cent.
- This resulted in a total loss of approximately 62 bcm of supply during the January-October 2026 period.
This disruption triggered a bidding war for available cargoes, driving gas prices in Europe and Asia to heights not seen since the 2022-23 energy crisis.
Consumption Patterns and Recovery
The IEA report highlights a volatile period for Indian consumers. Between March and May 2026, the crisis caused a sharp contraction in gas demand. However, the market showed resilience, with consumption levels recovering from June onwards to align broadly with the previous year's figures.
A Global Downtrend
India's situation mirrors a broader global slump. The IEA projects that worldwide natural gas demand will drop by about 1.5 per cent (nearly 65 bcm) in 2026. This would mark the third time in this decade that the world has seen an annual decline in gas demand. Additionally, global LNG supply is expected to shrink by 3 per cent, or almost 20 bcm, over the year.
The Path Forward: Security and Investment
In light of these geopolitical vulnerabilities, the IEA has issued a call for urgent action. The agency emphasizes that the current "geopolitical complexity" makes it essential to overhaul the architecture of global gas supply security.
To build resilience against future shocks, the IEA suggests:
- Stronger international cooperation between importing and exporting nations.
- Significant and adequate investment across the entire gas and LNG value chain.