Chennai: Natural gas consumption in FY2027 is expected to moderate by 15-20 per cent amid the West Asia crisis. Due to the slump in March, consumption had declined by 3 per cent in FY26.
Natural gas consumption declined 3 per cent in FY2026 due to a moderation in offtake across all sectors, barring City Gas Distribution and petrochemicals. The CGD sector witnessed a 9.3 per cent growth, while petrochemicals rose 18 per cent. Gas consumption in FY2027 is expected to further moderate by 15-20 per cent amid the West Asia crisis, finds ICRA.
With the resolution of the West Asia conflict in sight, ICRA expects the pricing and supplies of natural gas to ease. The return to normalcy or pre-war pricing and supply environment may take a couple of quarters as several facilities have faced damage and will take a few months to quarters to return to normalcy.
Prices of natural gas went up since the crisis started, and the availability also was squeezed. This saw Liquefied Natural Gas prices making a sharp rise post the West Asia crisis as 20 per cent of the global LNG capacity was disrupted. While the prices have moderated sharply following the announcement of discussions between the US and Iranian administrations, the successful signing of a peace deal and normalisation of trade flows through the Strait of Hormuz (SoH) will remain key drivers of LNG prices.
Domestic gas prices have risen with the Administered Pricing Mechanism (APM) price ceiling now at $7/MMBTU, while New Well Gas price witnessed a sharp uptick amid the rise in crude oil prices. With the recent softening of crude oil prices, NWG prices are expected to moderate in July 2026.
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