New Delhi: India’s natural gas consumption is projected to grow by 3–4 per cent year-on-year in FY27, following a period of near-term moderation in FY26, according to a latest report by rating agency ICRA.
The moderation in FY26 is attributed to lower gas offtake from fertiliser, power and refinery sectors. However, ICRA expects a rebound in FY27, driven primarily by a recovery in industrial demand and the continued expansion of the City Gas Distribution (CGD) network, strengthening natural gas’s role in India’s evolving energy mix.
Varun Gogia, Assistant Vice President and Sector Head at ICRA, said natural gas consumption will be supported by increased offtake from the refining, fertiliser and CGD segments. He added that expanding urban gas infrastructure will remain a key growth driver in the coming years.
The report also highlighted that crude oil prices are expected to average between $60 and $70 per barrel in FY27, amid muted global demand growth and rising supplies. Stable crude prices are likely to keep domestic crude producers’ profitability and capital expenditure plans intact, while petroleum product consumption is expected to grow modestly by 1–2 per cent.
ICRA noted that Singapore Gross Refining Margins (GRMs) are projected to remain in the range of $4–5 per barrel. Marketing margins on retail auto fuels are expected to stay healthy due to stable crude prices, while under-recoveries on domestic LPG sales are likely to decline.
On the global front, LNG prices have softened due to expectations of warmer winters in key consuming regions and comfortable inventory levels. Additionally, upcoming LNG capacity additions worldwide are expected to further moderate prices from 2027 onwards.
Domestic gas prices are also likely to ease in line with softer crude oil prices. Despite this, the sector’s capital expenditure intensity is expected to remain high over the next three years, driven by sustained investments in CGD infrastructure, gas pipelines and petrochemical projects.
As a result, industry debt levels are projected to rise to around Rs 300 billion by March 31, 2026. However, ICRA noted that overall debt metrics are expected to remain healthy.