India’s LNG buyers stall long-term deals as they press for lower prices

India’s liquefied natural gas (LNG) buyers are delaying the finalisation of multi-decade supply agreements as they seek cheaper pricing and more flexible terms, betting that a looming surge in global supply will strengthen their negotiating position, Bloomberg reported.

Major state-linked buyers such as GAIL (India) Ltd.(GAIL.NS) and Bharat Petroleum Corp. Ltd.(BPCL.NS) are pushing for lower prices and contract structures that better reflect market volatility. As a result, discussions with several LNG producers have remained unresolved for more than a year, according to people familiar with the matter. The strategy could pay off as a wave of new export projects from the US, Qatar and elsewhere comes online, potentially easing prices.

The stalled talks are expected to feature prominently at India Energy Week, which begins on January 27 and will draw global producers including Abu Dhabi National Oil Co. (ADNOC), which is not publicly listed, and TotalEnergies SE(TTE). These companies have invested heavily in large-scale export facilities, banking on sustained demand growth across Asia as economies expand and shift away from more polluting fuels.

India has long aimed to lift natural gas to 15% of its energy mix by 2030, roughly double current levels. Progress towards that target has been slow, largely because LNG prices have remained too high for many consumers. Imports have largely flattened since 2020, with Russia’s invasion of Ukraine in 2022 disrupting global markets and pushing prices to record highs.

Market conditions could now be turning. Global LNG capacity is likely to grow by about 50% by the end of the decade, the biggest expansion the industry has seen. Indian buyers are targeting long-term supply starting around 2028, when that expansion is expected to peak, Bloomberg reported.

In the near term, however, India’s buyers are relatively well supplied following a spate of contracts signed in 2024 and 2025, reducing the urgency to lock in additional long-term volumes. Future deals are likely to hinge squarely on cost, with Indian buyers remaining among the most price-sensitive in Asia and quick to switch to alternative fuels if LNG becomes uneconomical.

That sensitivity was evident earlier this month when cold weather across Europe and Northeast Asia drove prices sharply higher, prompting some Indian buyers to halt purchases and cancel tenders.

Analysts at Energy Aspects, a privately held consultancy, see significant upside for India’s LNG imports as new supply becomes available, particularly from the city gas and non-fertiliser industrial segments. Additional demand is also expected from expanding refining and petrochemical capacity, as domestic gas production growth remains weak.

Research from Rystad Energy AS, which is privately owned, suggests India is likely to return to the spot market when prices ease, reinforcing the country’s role as a price-sensitive buyer.

On a longer-term basis, Indian buyers have been seeking LNG supply priced below a 12% linkage to the Brent crude benchmark, while suppliers have so far resisted moving down from the mid-12% range, leaving negotiations at an impasse.