Will India’s Natural Gas Consumption See a Surge in FY27?
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Synopsis
India's natural gas market is set for a comeback in FY27, anticipated to grow by 3-4% driven by industrial recovery and city gas distribution expansion. Explore the factors influencing this surge and what it means for the energy sector.
Key Takeaways
- India's natural gas consumption is set to increase by 3-4% in FY27.
- Growth is driven by industrial recovery and city gas distribution expansion.
- Crude oil prices are forecasted at $60-$70 per barrel in FY27.
- Global LNG prices are anticipated to moderate from 2027.
- Industry debt levels may rise to Rs. 300 billion by March 2026.
New Delhi, Jan 2 (NationPress) India’s natural gas consumption is projected to increase by 3-4 percent (year-on-year) in FY27, after a temporary decline in FY26, attributed to reduced offtake from the fertiliser, power, and refinery sectors, according to a recent report.
The latest analysis from ICRA anticipates a recovery next year, spearheaded by a resurgence in industrial offtake and the ongoing expansion of the City Gas Distribution network, positioning natural gas as a central element in India’s transforming energy landscape.
As per Varun Gogia, Assistant Vice President and Sector Head at ICRA, the anticipated growth in natural gas consumption will be bolstered by heightened offtake from the refining, fertiliser, and city gas distribution sectors.
The report also forecasts that crude oil prices will likely hover around $60–$70 a barrel in FY27, driven by subdued global demand amid increasing supply. This scenario is expected to maintain profitability and capital expenditure plans for domestic crude producers, while consumption of petroleum products may witness a rise of 1–2 percent.
Gogia remarked, "Expected Singapore GRMs are anticipated to be in the $4-5/barrel range, and marketing margins for auto fuel retail sales are expected to stay healthy due to stable crude prices, with reductions in domestic LPG under recoveries anticipated."
Global LNG prices have softened due to expectations of milder winters in key markets and robust inventory levels, alongside anticipated global LNG capacity increases, which are expected to result in price moderation starting from 2027.
Simultaneously, domestic gas prices are predicted to decline as crude oil prices fall. The report highlighted that the capital expenditure intensity in the sector is expected to remain elevated over the next three years due to continuous investments in CGD infrastructure, gas pipelines, and petrochemical facilities.
As a consequence, the industry's debt levels are projected to reach approximately Rs. 300 billion by March 31, 2026, although debt metrics are expected to remain robust.
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Point of View
This report highlights a crucial trend in India's energy sector that reflects the ongoing evolution toward cleaner energy sources. As the country strives for energy security and sustainability, the projected growth in natural gas consumption underscores its importance in the national energy strategy.
NationPress
05/01/2026
Frequently Asked Questions
What is the projected growth rate of natural gas consumption in India for FY27?
India's natural gas consumption is expected to grow by 3-4 percent year-on-year in FY27.
What sectors are driving the growth in natural gas consumption?
The growth is driven by increased offtake from the refining, fertiliser, and city gas distribution sectors.
What are the expected crude oil prices in FY27?
Crude oil prices are projected to average between $60 and $70 a barrel in FY27.
How are global LNG prices expected to change?
Global LNG prices are expected to ease due to warmer winters and healthy inventory levels.
What will be the impact on the industry’s debt levels?
The industry’s debt levels are projected to increase to around Rs. 300 billion by March 31, 2026.
