LNG

The European Commission is considering introducing gas price caps, enhanced power purchase agreements (PPA) or contracts for difference (CfD) to shield industry and households from soaring energy costs caused by the halt in Middle Eastern LNG deliveries.

LNG use for transport is driving infrastructure investment in China, where the fleet of LNG-fuelled trucks tripled since 2019 and reached more 1 million vehicles at the beginning of 2026. However, battery electric trucks have now outcompeted LNG ones, capturing 29 percent market share in 2025 versus LNG's 24.8 percent .

India is poised to snap up big parts of the substantial volume of uncontracted LNG from the Middle East. Buying interest is on the rise as the Indian government allows utilities to blend LNG with domestically produced gas in a bid to make it more affordable for power generation, compared with coal.

Watch out for uncontracted LNG cargoes, seems to be the motto of Indian commodity traders and large utilities. Looking ahead, Rystad’s Kaushal Ramesh, Vice President Gas & LNG Research, expects savvy buyers to secure large parts of the uncontracted LNG production from Qatar, Oman and potentially Iran – at favourable terms.

“The nation is well-positioned to attract aggressive targeting from Middle Eastern producers and offtakers,” he said, noting nearly 100 million tons per annum (mtpa) of Middle East LNG will remain uncontracted by 2035.”

Flexible, low-cost supply preferred

Some potential pitfalls should, however, be taken into consideration: A key issue is Indian buyers’ history of renegotiating or even abandoning near-complete deals, which creates uncertainty for suppliers.

In Ramesh’s view, “this preference for flexibility and cost-effectiveness over long-term commitments highlights India's focus on securing the best prices for its consumers in a volatile global market – but it could limit LNG growth prospects.”

Delays at infrastructure build-out hampers the development of India’s overall gas and power gen sector. Regasification terminals remain concentrated in the western part of the country, and efforts to expand the gas pipeline network to other regions have been inconsistent.

“Slow progress is due to regulatory hurdles, challenges in securing investments, difficult terrain, and competing priorities,” he criticised, “as India channels significant resources into renewable energy development alongside its gas infrastructure.”

Domestic production can’t meet demand

Come 2040, India’s total gas consumption is forecast to double to almost 114 billion cubic metres (bcm) and despite a 51 percent jump in domestic production to 36.7 bcm by 2025, this will not suffice to meet India’s growing energy hunger. The Asian powerhouse and most populous nation will hence heavily rely on imports to meet its future energy needs.

Long-term contracts, extending way into the 2030s and beyond, help shield India from global price fluctuations and ensure a steady stream of cargoes shipped to Indian shores. Through these LNG offtake accords, India does not only strengthen its energy security but also facilitates a swift exit from more emission-intensive fuels like crude oil, mazut and thermal coal.

Coal still king in India, at least for now

India’s heavy reliance on coal has become apparent during the summer 2024 heatwaves, which temporarily propelled up coal-burn to meet peak power demand. Natural gas, on the other hand, currently accounts for just 2 percent of the country’s power mix – and in fact, coal-generated power is not projected to start falling this side of 2040.

Though gas-burn is unlikely to drive LNG imports, analysts at Oslo-based Rystad Energy believe “the sector could still see growth, however, depending on future policies to promote coal-to-gas switching or introduce carbon pricing.”