India's natural gas import bill surged 23 per cent to $8.5 billion in the first half of financial year 2026-27 (April–September 2026), up from $6.9 billion in the same period a year earlier, as the ongoing West Asia conflict pushed global energy prices sharply higher, according to data compiled by the government's Petroleum Planning and Analysis Cell (PPAC). The jump marks one of the steepest half-year increases in India's gas import costs in recent memory, driven by both price and supply-route disruptions.

Higher Prices and Rising Volumes

The cost surge was primarily price-driven, but import volumes also climbed. India imported 18,189 million standard cubic metres (MMSCM) of liquefied natural gas (LNG) during the six-month period — a 4.4 per cent rise over the 17,414 MMSCM recorded in the corresponding period of the previous year. The combination of elevated global prices and increased procurement has significantly widened the energy import outgo.

Notably, the disruption of shipping routes through the Strait of Hormuz forced oil marketing companies to source more LNG from the United States, which, according to a senior official, involved considerably higher shipping costs — amplifying the financial burden beyond what price alone would have implied.

Domestic Production Falls Short

The pressure on imports has been compounded by a decline in domestic natural gas output. Production fell 4.4 per cent to 16,804 MMSCM during April–September 2026, compared with 17,585 MMSCM in the year-earlier period. Officials attributed the drop to ageing production fields operated by Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), both of which have faced declining well productivity in mature blocks.

As a result, India's dependence on imported natural gas rose to 52.3 per cent of total consumption during April–September FY27, up from 50.1 per cent in the same period of the previous year — crossing the halfway mark for the first time in recent years.

Overall Consumption Stays Flat

Despite the higher import bill and falling domestic output, overall natural gas consumption remained nearly flat at 34,769 MMSCM, against 34,773 MMSCM a year earlier. This suggests that demand growth has stalled even as costs escalate — a structural concern for gas-dependent industries including fertilisers, power generation, and city gas distribution.

Red Sea Emerges as a Second Choke Point

The September 2026 data offer a nuanced signal: India's monthly gas import bill was broadly unchanged at $1.2 billion year-on-year, even as import volumes declined 8.5 per cent to 2,957 MMSCM from 3,233 MMSCM — pointing to a sharp per-unit cost increase driven by geopolitical disruption.

Beyond the Strait of Hormuz, the Red Sea has emerged as a second critical choke point. Houthi rebel attacks in Yemen have extended the conflict zone into Red Sea shipping lanes, with Houthi forces reportedly controlling significant stretches of the coastal region. The dual threat to Gulf and Red Sea routes has forced Indian importers to seek costlier alternative supply sources and longer shipping paths, with no near-term resolution in sight.

With domestic production under structural pressure and geopolitical risks keeping global prices elevated, India's gas import burden is likely to remain high through the second half of FY27.