India's LNG Imports Rise Amid Domestic Supply Shortfalls

India's liquefied natural gas (LNG) imports rose to 11.86 billion cubic metres (bcm) between April and July 2026, marking a 5.3% increase compared to the same period last year. Provisional data from the Petroleum Planning and Analysis Cell (PPAC), the research arm of India’s oil ministry, published on 31 August, indicates that monthly volumes were 2.47 bcm in April, 2.96 bcm in May, 3.52 bcm in June, and 2.91 bcm in July.

Domestic Production Decline

The increase in LNG imports primarily addressed a shortfall in domestic supply rather than significant demand growth. India's gas production for April-July fell by 4.4% year-on-year to 11.1 bcm. Total gas demand during this period was 23 bcm, an increase of just 0.4%. Consequently, imports covered slightly more than half of the country's consumption, compensating for declining domestic field output.

This four-month trend reverses the pattern of the previous fiscal year. In FY2025-26, LNG imports were 34.22 bcm, a 4.2% year-on-year decrease. Domestic production for the same year declined by 3.5% to 34.33 bcm, and demand contracted by 3.9% to 68.54 bcm.

Weather and Policy Influences

Weather conditions are expected to contribute to firmer LNG demand in the fourth quarter. The India Meteorological Department (IMD) reported a 13% deficit in cumulative monsoon rainfall between 1 June and 26 August, with shortfalls concentrated in eastern, northeast India, and the South Peninsula. On 31 August, the IMD forecast September rainfall below 91% of the long period average and noted strengthening El Niño conditions, projecting above-normal temperatures across most of the country.

Reservoir levels have reflected the rainfall deficit. Central Water Commission data for 27 August showed national live storage at 125.30 bcm, or 67.83% of capacity, compared to 153.08 bcm a year prior. Weaker hydropower availability post-monsoon, combined with higher temperatures, is expected to increase the reliance on thermal power generation.

Fertiliser demand also supports LNG consumption. The Cabinet Committee on Economic Affairs approved the National Investment Policy for Urea-2026 on 15 July, aiming for 8-9 new gas-based urea units and approximately 10 million tonnes of additional capacity. A deficient monsoon typically boosts irrigated rabi crop acreage, sustaining urea offtake and the associated gas requirement. However, the price of Asian spot LNG, which firmed in late August, remains a limiting factor, as Indian power and industrial buyers have historically reduced purchases at elevated price levels. Imports are often driven by contracted volumes, fertiliser, and city gas offtake rather than opportunistic spot buying, according to ICIS.