India’s natural gas demand to rebound FY27

New Delhi: India’s natural gas consumption is expected to grow by 3-4 per cent (year on year) in FY27, following near term moderation in FY26, driven by lower offtake from fertiliser, power and refineries, a new report has said.

The latest report from ICRA forecasts a rebound next year led by recovery in industrial offtake and continued expansion of the City Gas Distribution network, which will position natural gas as a focal point in India’s evolving energy narrative.

Natural gas consumption in the country is set to grow, supported by increased offtake from the refining, fertiliser, and city gas distribution sectors, said Varun Gogia, Assistant Vice President and Sector Head, ICRA.

The report added that crude oil prices are projected to average $60–$70 a barrel in FY27, due to muted global demand growth amid increasing supplies. It will keep domestic crude producers’ profitability and capex plans intact, while petroleum product consumption may rise 1–2 per cent.

"Singapore GRMs are expected to be in the range of $4-5/barrel” and that “the marketing margins on retail sales of auto fuels are expected to remain healthy owing to stable crude prices and under recoveries in domestic LPG are expected to reduce," Gogia informed.

Global LNG prices have eased on expectations of warmer winters in key regions and healthy inventory levels and the upcoming LNG capacity additions globally are expected to lead to a moderation in prices from 2027.

Concurrently, domestic gas prices are also expected to moderate as crude oil prices soften. The report noted that the sector’s capital expenditure intensity is expected to remain high over the next three years, driven by ongoing investments in CGD infrastructure, gas pipelines, and petrochemical capacities.