India Eyes Increased LNG Imports from the US
Context:
With the new Donald Trump administration prioritising American energy production and exports, India’s state-run oil and gas companies—including GAIL, Indian Oil Corporation (IOC), and Bharat Petroleum Corporation (BPCL)—are actively engaging with US suppliers to expand liquefied natural gas (LNG) imports.
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- Petroleum Secretary Pankaj Jain confirmed that Indian companies are exploring LNG procurement from global markets, particularly the US.
- It is expected that higher LNG purchases will be a key agenda item in discussions between the two nations during the PM’s visit.
About LNG
Liquefied natural gas (LNG) is natural gas cooled to approximately -161°C (-259°F), reducing its volume 600-fold for efficient shipping. The LNG chain involves gas fields, liquefaction plants where impurities are removed and the gas is cooled, LNG carriers for transport, and regasification terminals where the LNG is returned to its gaseous state. The liquefaction process typically uses cascade, mixed refrigerant, or expansion cycles to cool the gas after removing impurities, making LNG a more manageable and transportable energy source.
US LNG Exports and India’s Growing Demand
- The Trump administration’s recent reversal of the Joe Biden-era ban on export permits for new US LNG projects has bolstered Washington’s position as the world’s leading LNG exporter.
- This policy shift is likely to facilitate increased US-India energy cooperation.
- Beyond securing LNG to meet India’s rising gas consumption, increased energy imports from the US could also help balance New Delhi’s trade surplus with Washington.
- Other countries have already expressed interest in boosting US LNG imports, seemingly to strengthen their trade relationships with the US in light of Trump’s tough stance on tariffs.
India’s Growing LNG Market and Infrastructure Expansion
- India is one of the world’s top LNG importers, with ambitions to raise the share of natural gas in its primary energy mix from just over 6% to 15% by 2030.
- Given the country’s limited domestic natural gas production, this growth is expected to be fuelled largely by increased LNG imports.
- To accommodate this demand, India has been steadily expanding its LNG import and regasification infrastructure.
Current LNG Agreements and Pricing Strategy
- At present, GAIL has long-term contracts for 5.8 million tonnes per year of US LNG, while the majority of India’s contracted LNG volumes are sourced from Qatar.
- The pricing structures of these agreements differ significantly—Qatari LNG contracts are linked to crude oil prices, whereas US LNG deals typically follow Henry Hub pricing, the benchmark for US gas prices.
With India seeking to secure reliable and affordable LNG supplies, ongoing discussions between Indian and American companies could pave the way for deeper energy cooperation between the two nations.
