Mint Explainer: Why is India’s natural gas consumption falling despite the government’s push?

India's natural gas consumption has seen an unexpected slump, declining 7.5% in the first 10 months of 2025. This drop is particularly notable considering the government's strong emphasis on increasing the share of natural gas in the country's energy mix from 6% to 15% by 2030. The current decline contrasts sharply with the 13% increase in natural gas usage recorded in 2024.

Key Factors Behind the Decline

Several factors have contributed to this decrease in natural gas consumption:

• Prolonged Monsoon Season: An extended monsoon season in 2025 significantly reduced power demand, a sector that relies on natural gas.
• Cheaper Alternative Fuels: Lower prices of alternative fuels like liquefied petroleum gas (LPG) and crude oil have led some consumers to switch away from natural gas.
• Refinery and Fertilizer Plant Shutdowns: Shutdowns of refinery and fertilizer plants for maintenance or other reasons have also contributed to the reduced demand for natural gas.
• Decline in Domestic Production: India's domestic natural gas production slipped nearly 4% in September 2025. Industry analysts attribute this fall to aging gas fields, project delays in new offshore blocks, and technical challenges in some producing regions.
• Drop in LNG Imports: India's gross natural gas production fell 5.1% year-on-year in October 2025, while liquefied natural gas (LNG) imports declined 21.6%.

Sector-Specific Trends

The impact on natural gas consumption varies across different sectors:

• Power Sector: Demand from the power sector has fallen sharply.
• City Gas Distribution: City gas consumption rose nearly 9% year-on-year.
• Petrochemicals: Petrochemical use jumped more than 34%.
• Fertilizer Industry: The fertilizer industry remains the largest consumer of natural gas, accounting for 28% of the total.

Government Initiatives and Targets

The Indian government has set an ambitious target to increase natural gas consumption to 500 million metric standard cubic meters per day (MMSCMD) by 2030, a threefold increase from the current 185 MMSCMD. To achieve this, the government plans to invest $67 billion in the natural gas sector over the next six years. This investment aims to provide natural gas to end consumers at stable prices, supported by policies and regulations that promote its use across the country.

Initiatives include expanding the gas pipeline network from the current 24,000 km to 35,000 km in the coming years under the "One Nation One Gas Grid" initiative. The government is also focusing on enhancing private sector participation by providing financial viability funding and implementing policy reforms to simplify regulations and offer fiscal incentives.

Challenges and the Path Forward

Despite the government's efforts, several challenges remain in achieving the 2030 target:

• Infrastructure Development: Expanding pipeline infrastructure and urban network connectivity is crucial to boosting LNG demand.
• Domestic Production: Recovering and increasing domestic gas production is essential to reduce reliance on imports.
• Policy Environment: A more favorable policy environment is needed to meet the target of gas accounting for 15% of the energy mix by 2030.
• Pricing: Providing natural gas to end consumers at stable prices is vital for promoting its use.

To meet the 2030 targets, the rollout of PNG connections would need to accelerate significantly, and the expansion of the CNG station network would have to expand faster through 2030. Despite the recent downturn in consumption, the International Energy Agency (IEA) forecasts that India's natural gas demand will increase by nearly 60% by 2030. The city gas distribution sector is expected to lead this growth, supported by the rapid expansion of CNG infrastructure and the cost advantage of gas over liquid fuels for small industrial users.