The Indian natural gas industry slowed down significantly during the first half of the 2025-26 fiscal year (FY26), as demand was impacted by a strong early monsoon and fluctuating liquefied natural gas (LNG) costs. According to industry analysts and statistics from the Ministry of Petroleum and Natural Gas (MoPNG), LNG imports decreased dramatically in spite of lower domestic production, demonstrating the ongoing impact of weather patterns and international energy prices on India’s energy mix. Major industries like refineries, fertilizers, and power production reduced their gas usage as spot LNG prices remained high and electricity consumption fell during the rainy season. The causes of the fall, the industries most impacted, and the implications for India’s future energy picture are all covered in this piece.
Event Summary
The Petroleum Planning and Analysis Cell (PPAC) reports that India’s LNG imports decreased by 11.1% between April and September 2025, from 19.0 bcm to 16.9 billion cubic meters (bcm), between April and September 2025. The drop is noteworthy because it occurred even as domestic natural gas production fell from 18.2 billion cubic meters to 17.6 billion cubic meters, highlighting a decrease in total consumption. As a result, India’s total gas supply from imports fell from 51.5% to 49.3% over the previous year.
The India Meteorological Department (IMD) reported that the 2025 southwest monsoon produced 108% of the long-period average rainfall, which was the highest since 2001. The need for gas-based power plants decreased as a result of the decreased demand for electricity caused by the copious rains. At the same time, the continuous price fluctuation of LNG in the global market caused industries like refineries and fertilizers to switch to less expensive substitutes like naphtha.
Major Indian oil and gas firm executives verified that they had predicted increased gas demand throughout the monsoon season, but that reduced electricity usage had taken them by surprise. Due to the unpredictable fluctuations in demand and prices, LNG importers reduced shipments as they waited for a more consistent global pricing environment.
Key Facts and Analysis
1. Weather and Prices: The Two Effects
The fall was largely caused by the prolonged monsoon, which lasted far into September. As cooler temperatures reduced the need for air conditioning and industrial electricity usage, heavy rains tempered energy usage. Gas-fired power plants, which frequently make up for supply shortages in the height of summer, were running at a much lower output level. According to data from the Central Electricity Authority (CEA), the output of gas-based electricity decreased by 25% annually to 15.8 billion units, while the plant load factors declined from 19.4% to 17.9%.
In addition to this, geopolitical conflicts and supply uncertainty caused notable price swings in the global LNG market. The high spot prices throughout the April–September period deterred industrial consumers. Therefore, a number of industries that consume a lot of gas either cut back on their activities or switched to alternative fuels.
2. Sector-Wise Trends in Gas Consumption
Power Sector: Regassified LNG (RLNG) use dropped 18 per cent to 1.8 bcm, consistent with lower electricity demand during the monsoon.
Fertiliser Sector: The largest gas-consuming segment, fertilisers, saw RLNG consumption fall 8.5 per cent to 8.2 bcm, as producers substituted costlier LNG with naphtha.
Refineries: Refineries mirrored the trend, reducing RLNG usage by 17.3 per cent to 1.9 bcm.
City Gas Distribution (CGD): In contrast, CGD operators registered a 23.1 per cent increase in RLNG use (to 2.9 bcm), as they have limited fuel alternatives.
3. Is it a Short-Term Dip or a Structural Issue?
The decline is described by energy experts as transient rather than structural. Numerous new LNG export initiatives are anticipated to go live worldwide by 2026, which may lower prices and spur demand from price-conscious Indian businesses. Additionally, India’s long-term goal is to increase the proportion of natural gas in the primary energy mix from about 6% now to 15% by 2030.
Oil and gas company leaders believe that the nation’s expanding industrialization and urbanization will support a long-term demand for gas, especially during transitions to cleaner energy sources. Even with the growth of import terminals and storage infrastructure, India will continue to be heavily reliant on imported LNG due to its restricted domestic gas production.
4. Outlook: Finding the Balance Between Growth and Sustainability.
India’s energy transition plan continues to depend heavily on natural gas. Despite potential short-term disruptions brought about by weather shocks and LNG price volatility, gas is still significantly cleaner than crude oil or coal. Once prices stabilize, the government’s continuous initiatives, like growing city gas networks and encouraging gas-based businesses, are anticipated to increase demand.
Energy planners are now concentrating on diversifying supply sources and increasing resilience to seasonal demand fluctuations. The FY26 experience teaches investors and policymakers important lessons about how to handle energy security in the face of climate and market unpredictability.
Call to action & conclusion
The precarious equilibrium between global energy markets, local weather patterns, and industrial consumption is highlighted by the decline in India’s LNG imports between April and September 2025. Even though a strong monsoon and variable LNG prices briefly slowed imports, this pattern is not likely to last as the world’s supply grows and prices become more steady. Stakeholders throughout the power, fertilizer, and urban gas industries must get ready for a resurgence in gas usage as India is committed to boosting the proportion of natural gas in its energy mix.
India’s gas tale is still essential to meeting long-term development objectives as the globe moves toward greener fuels. Keep up to date on in-depth business and energy information from [YourWebsiteName.com], your source for worldwide market trends that are influencing the direction of energy and trade in the future.
