12 months ago
India's Gas Market Strains: High Prices and Shifting Fortunes
India's gas market is facing tough times.
Demand for gas isn't growing much, and the cost of importing it is high, making it hard for companies to make money.
Companies that rely on expensive imported gas are struggling, while those with cheaper gas from the US are doing better.
More gas is expected to be produced in the future, which might bring down prices.
But for now, many companies are having a hard time due to the high cost of gas.
India's gas demand has flattened, with a slight drop in overall consumption.
Expensive LNG imports, priced at $11-13/mmbtu, are hurting city gas distributors.
GAIL, with Henry Hub-linked contracts, is benefiting from cheaper gas prices.
Increased LNG liquefaction capacity of 210 mmtpa is expected from 2026 onwards.
Companies like Gujarat Gas, IGL, and MGL face margin pressures due to high spot LNG prices.
- Who
- JM Financial, Gujarat Gas, IGL, MGL, GAIL, Petronet LNG, GSPL
- What
- India's gas market faces challenges due to high LNG prices and falling domestic output. Demand has flattened, impacting various companies differently.
- Where
- India
- When
- August 2025, and the period leading up to it.
- Why
- Expensive imports and weaker local output are stagnating India's gas story, with high spot prices causing significant margin changes.
Companies Dependent on Spot LNG
Companies with Henry Hub-Linked Contracts
Impact of High LNG Prices
Companies Dependent on Spot LNG
High spot prices directly hurt margins and make it difficult to compete.
Companies with Henry Hub-Linked Contracts
Benefit from cheaper gas prices, offering resilience during price fluctuations.
Key facts
- Key Players Facing Challenges
- Gujarat Gas, IGL, MGL
- Beneficiary
- GAIL
- Henry Hub Price
- $3-$3.5/mmbtu
- Asian Spot LNG Price
- $11-$13/mmbtu
- LNG Liquefaction Capacity Increase Expected
- 210 mmtpa from 2026
Quotes
JM Financial
The brokerage group
“This pricing spread is crucial; it explains why companies tied heavily to spot supply are losing ground, while those with Henry Hub-linked volumes, such as GAIL, are benefiting from lower landed costs”
financialexpress.com
“For a city gas distributor whose bread and butter is CNG and household PNG, sustained high spot LNG is a direct hit on margins”
financialexpress.com
