Gas Demand Grows Even as Supply Shrinks
What India’s gas numbers are really telling us
In December, India’s gas data did something markets are not supposed to do.
Supply went down.
Consumption went up.
This wasn’t a data glitch. It was a mirror held up to how India’s gas system now works.
– Domestic gas production fell 4.2% year-on-year
– LNG imports declined 0.7%
– Gas available for sale dropped 2.6%
– Total gas consumption rose 2.9%
In a real market, this doesn’t happen.
There was no hidden supply
Nothing mysterious filled the gap.
– Net gas for sale stayed around 83% of gross production
– LNG imports were lower, not higher
– No inventory drawdowns or accounting tricks
The answer lies in who consumed gas, not where it came from.
Some sectors are protected
Consumption rose because priority sectors were insulated.
– Fertiliser took nearly 30% of total gas demand
– City Gas Distribution grew over 8% year-on-year
– Petrochemicals increased consumption by more than 9%
These sectors expanded even as total gas availability shrank.
To make that possible, other sectors stepped back.
– The “Others” category fell more than 12%
– Refinery gas use is down sharply on a cumulative basis
– Power demand spiked briefly, but remains well below last year overall
Demand didn’t grow. It was reassigned.
Power demand gives the game away
Gas use in power jumped in December.
But over April to December, power sector gas consumption is still far lower than last year.
Gas shows up in power generation only when something breaks — coal shortages, grid stress, policy intervention.
That isn’t market demand.
That’s manufactured demand.
LNG makes this unavoidable
Here’s the structural reality:
Imported LNG is now the single largest source of gas in the system.
When gas is imported, every molecule has to be allocated. There is no surplus drifting around, looking for buyers.
Allocation replaces price discovery.
Geography tells the same story
Most gas is consumed in a handful of states:
– Gujarat
– Uttar Pradesh
– Maharashtra
That reflects pipelines, city gas networks, and old industrial clusters — not nationwide demand growth.
What the numbers really say
December’s data doesn’t show a gas market responding to prices or abundance.
– Protected sectors holding or growing consumption
– Flexible sectors being squeezed
– Power acting as a swing consumer
– LNG anchoring a constrained system
Headline demand growth survives through policy, not economics.
India’s gas market is no longer about producing or importing more gas.
It’s about deciding who gets to keep using gas when there isn’t enough to go around — and keeping demand numbers looking healthy while doing it.
That’s the uncomfortable truth hidden in December’s data.
Read the full story on www.indianpetroplus.com
