Image Source: The Economic Times
In a move that underscores India’s evolving energy strategy and its push for greater supply security, the Ministry of Petroleum and Natural Gas confirmed on September 16, 2025, that the country is actively diversifying its liquefied natural gas (LNG) import sources. The announcement, made by India’s Oil Secretary, comes amid shifting global energy dynamics, volatile spot prices, and the country’s long-term ambition to increase the share of natural gas in its energy mix to 15% by 2030, up from the current 6–7%.
India, the world’s fourth-largest LNG importer, is recalibrating its procurement strategy to reduce dependence on a handful of suppliers and mitigate risks associated with geopolitical disruptions, price spikes, and supply bottlenecks.
Why Diversification Matters Now
The decision to diversify LNG imports is driven by multiple factors:
Volatile global prices: Spot LNG prices have remained elevated in 2025, averaging over $11 per MMBtu, making it less competitive for price-sensitive Indian buyers.
Geopolitical risks: With lingering effects from the Russia-Ukraine conflict and supply chain disruptions in the Middle East, India is seeking to insulate itself from external shocks.
Demand-supply mismatch: Domestic gas production is rising but still falls short of meeting industrial and urban demand, especially in sectors like fertilizers, city gas distribution (CGD), and power generation.
India imported approximately 16 million tonnes of LNG in the first eight months of 2025, down 10% year-over-year, marking the first annual contraction in nearly a decade. However, analysts expect this dip to be temporary, with imports rebounding in 2026 as new global supply projects come online and prices stabilize.
New Partners, New Pipelines
India’s diversification strategy includes:
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Expanding long-term contracts with countries like Qatar, the United States, and Australia, while exploring new deals with Mozambique, Nigeria, and Oman.
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Increasing spot purchases from emerging exporters such as Russia (via Arctic LNG) and Papua New Guinea, depending on geopolitical feasibility.
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Boosting regasification capacity at terminals in Gujarat, Andhra Pradesh, and Tamil Nadu, enabling more flexible sourcing and faster turnaround.
The government is also working to strengthen pipeline infrastructure and improve last-mile connectivity for CGD networks, which are expected to drive 10% year-over-year growth in gas consumption.
Short-Term Dip, Long-Term Growth
Despite the current slowdown in LNG imports, India’s long-term outlook remains bullish. According to Rystad Energy, India’s LNG demand is expected to exceed 40 million tonnes by 2030, nearly doubling from current levels. This growth will be fueled by:
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Rising urbanization and industrialization
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Transition away from coal and oil
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Policy support for clean energy and gas inclusion in GST
“The dip in 2025 is a temporary, price-driven phenomenon,” said Kaushal Ramesh, VP for gas and LNG research at Rystad Energy. “The years ahead will see more contracts ramp up and also lower spot prices”.
Strategic Implications
India’s diversification push is not just about energy security—it’s also a signal to global markets that the country is positioning itself as a flexible, forward-looking buyer. By reducing reliance on any single supplier, India can negotiate better terms, hedge against volatility, and align its energy imports with broader diplomatic and trade goals.
The move also complements India’s climate commitments, as natural gas is seen as a transitional fuel that can help reduce carbon emissions while renewable infrastructure scales up.
Sources: The Hindu BusinessLine, Petroleum Planning & Analysis Cell, S&P Global Commodity Insights
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