India’s Natural Gas Consumption Projected to Rebound in FY27

New Delhi: India’s natural gas consumption is projected to grow by 3–4 per cent year-on-year in FY27, after witnessing a temporary slowdown in FY26 due to reduced demand from the fertiliser, power, and refining sectors, according to a report released by ICRA.

The report anticipates a recovery in the following fiscal year, supported by a revival in industrial demand and the continued expansion of the City Gas Distribution (CGD) network. This trend is expected to reinforce natural gas as a key component of India’s evolving energy mix.

Varun Gogia, Assistant Vice President and Sector Head at ICRA, stated that overall gas consumption will be driven by higher offtake from refineries, fertiliser units, and CGD players. He added that crude oil prices are likely to average between $60 and $70 per barrel in FY27, reflecting subdued global demand growth alongside rising supply.

Stable crude prices are expected to support domestic oil producers’ profitability and capital expenditure plans, while consumption of petroleum products may increase by 1–2 per cent. Gogia noted that Singapore Gross Refining Margins (GRMs) are projected to remain in the range of $4–5 per barrel, and marketing margins on retail auto fuels are likely to stay healthy. Additionally, under-recoveries in domestic LPG are expected to decline.

The report highlighted that global LNG prices have softened due to expectations of warmer winters in major consuming regions and comfortable inventory levels. Looking ahead, new LNG capacity additions worldwide are expected to exert downward pressure on prices from 2027 onwards.

At the domestic level, gas prices are also expected to moderate in line with easing crude oil prices. However, capital expenditure in the sector is set to remain elevated over the next three years, driven by sustained investments in CGD infrastructure, gas pipelines, and petrochemical facilities.

As a result, industry debt is projected to rise to around Rs 300 billion by March 31, 2026. Despite this increase, ICRA expects overall debt metrics to remain at healthy levels.

With inputs from IANS