Liquefied Natural Gas

Geography glossary

Also called: LNG · Topic: Energy Resources of India: Conventional and Non-conventional · NCERT: Beyond NCERT

Meaning

Liquefied Natural Gas (LNG) is natural gas, mostly methane, that has been cooled to about −162°C until it turns into a liquid. As a liquid it takes up about 600 times less space, so special ships can carry it across oceans. At the import terminal it is warmed back into gas and sent into pipelines.

It matters because India imports about half of its natural gas as LNG. India's target is a 15% share for gas in its energy mix by 2030, and that target depends on these imports.

Explanation

How the LNG chain works

  • Step 1: Liquefaction (turning gas into liquid)
  • Gas from a field is cleaned and cooled to about −162°C in a liquefaction plant.

  • It becomes a liquid about 600 times smaller in volume.

  • Step 2: Shipping

  • Special insulated tankers carry the liquid by sea.

  • Gas fields far from India can then sell to India even without a pipeline link.

  • Step 3: Regasification (turning the liquid back into gas)

  • At an import terminal on the coast, the LNG is warmed and becomes gas again.

  • India has 8 regasification terminals with about 52.7 MMTPA (million tonnes per annum) of capacity.

  • Step 4: Pipelines to users

  • The gas enters trunk pipelines and the National Gas Grid.
  • It goes to fertiliser (urea) plants, power stations, industries, petrochemical units and city gas networks (CNG for vehicles and PNG for homes).

Why India needs LNG

  • India's own gas comes from Mumbai High, Bassein, the Cambay basin and the KG basin (KG-D6). This is not enough.
  • Gas imports doubled from 13 MT (2014-15) to 27 MT (2024-25).
  • LNG demand is expected to pass 40 MT a year by 2030.
  • Gas is about 6% of India's energy mix, against a global average of about 24%. Sources give the Indian figure as 6%, 6.3% or 6.7%.
  • Policy support:
  • LNG imports come under the Open General Licence (OGL), which means no special import licence is needed.
  • 100% FDI (foreign investment) through the automatic route is allowed in LNG terminals.
  • The nodal ministry is the Ministry of Petroleum & Natural Gas (MoPNG).

How LNG is bought: contracts and pricing

  • Long-term contract or spot cargo
  • A Sale and Purchase Agreement (SPA) is a binding contract that runs for 10 to 20 years or more.

  • Spot LNG is bought one cargo at a time, at that day's price. It can jump suddenly, and the Parliamentary committee warned about this risk.

  • Oil-linked pricing

  • Long-term LNG is usually priced against crude oil, using a "slope" (a fixed percentage of the oil price).
  • Petronet's 7.5 MTPA Qatar deal was renegotiated in 2015. The price formula moved to a 3-month Brent average (Brent is the main global crude price), and India agreed to buy an extra 1 MTPA.

  • The 2024 Qatar extension to 2048 saved about USD 6 billion.

  • Take-or-pay

  • The buyer pays for the full contracted volume even if it does not take all the cargoes.

  • Portfolio LNG

  • The seller supplies from several plants it owns, not from one fixed source. The seller decides which plant sends each cargo.

The condition it needs: pipelines behind the terminal

  • A terminal is useful only if pipelines can carry the gas inland.
  • In April–February 2025-26, Dahej ran at 94.3% utilisation (share of capacity actually used). Every other terminal ran at 35% or lower.
  • Dahej has strong pipeline links and heavy demand nearby in Gujarat.
  • PNGRB (Petroleum and Natural Gas Regulatory Board) now requires new terminals to register and file an evacuation plan, which shows how the gas will leave the terminal.

Where it occurs

  • Indian LNG import terminals:
  • Dahej, Hazira, Mundra and Chhara (Gujarat). Chhara has a capacity of 5 mtpa.
  • Dabhol (Maharashtra).
  • Kochi (Kerala).
  • Ennore (Tamil Nadu).

  • Gujarat is India's LNG hub.

  • Pipelines that carry LNG inland:

  • Hazira–Vijaipur–Jagdishpur (HVJ), GAIL's first trunk line.
  • Pradhan Mantri Urja Ganga (Jagdishpur–Haldia–Bokaro–Dhamra) to eastern India.

  • The National Gas Grid, which is to grow to about 33,500 km.

  • Main suppliers abroad:

  • Qatar: India's largest gas import deal is the Petronet contract, extended to 2048.
  • UAE: India's third-largest LNG supplier, including supply from Ruwais.

  • Cargoes loaded inside the Gulf must pass the Strait of Hormuz, a narrow sea passage and a chokepoint.

  • New uses: NITI Aayog backs LNG as a fuel for medium and heavy trucks.

Don't confuse with

  • CNG (Compressed Natural Gas): the same natural gas, but squeezed under high pressure, not cooled into a liquid. City gas networks supply it to vehicles. LNG is a liquid made for shipping by sea.
  • LPG (Liquefied Petroleum Gas): mainly propane and butane, kept liquid under pressure and used as cooking gas (PM Ujjwala Yojana, 2016). LNG is mainly methane, kept liquid by extreme cold.
  • PNG (Piped Natural Gas): gas delivered to homes by pipe. This is the last stage of the chain. Regasified LNG can be one of its sources.
  • Gas hydrates and coal-bed methane: domestic sources of methane. Hydrates are ice-like solids in seabed sediments (KG basin, NGHP-01 and NGHP-02) and are not yet mined. Coal-bed methane is drawn from coal seams (Raniganj, 2007). LNG is imported gas.

Prelims Hooks

  • LNG is natural gas cooled to about −162°C. Its volume shrinks about 600 times. It is turned back into gas (regasified) at import terminals.
  • India has 8 regasification terminals with about 52.7 MMTPA capacity. The goal is 70 mtpa by 2030 and 100 mtpa by 2040.
  • Dahej (Gujarat) has the highest terminal utilisation, at 94.3%. Other terminals: Hazira, Mundra, Chhara (Gujarat), Dabhol (Maharashtra), Kochi (Kerala), Ennore (Tamil Nadu).
  • LNG imports come under OGL, and LNG terminals allow 100% FDI through the automatic route.
  • Target: natural gas at 15% of the energy mix by 2030. The baseline is quoted as 6%, 6.3% or 6.7%, but the target stays the same.
  • Trap: the UAE is India's third-largest LNG supplier, not the largest. India is the largest buyer of UAE LNG.

Mains Points

  • Energy security and diversification (GS-III)
  • Import dependence exposes India to sudden price jumps on the spot market. Long-term SPAs give steady supply.
  • Sourcing gas from outside the Gulf lowers the risk from the Strait of Hormuz. But relying on one seller country is still a risk.

  • Past deals show that pricing and take-or-pay terms decide the real cost. The Qatar deal had to be renegotiated.

  • The bottleneck is pipelines, not terminals (GS-III, infrastructure)

  • Most terminals run at 35% or less, while Dahej runs nearly full. The gap comes from missing pipeline links.

  • Building regas capacity towards 70 mtpa must go together with the National Gas Grid (about 33,500 km) and PNGRB's evacuation-plan rule. Without pipelines, LNG cannot reach eastern and southern states.

  • Transition fuel or lock-in (GS-III, environment)

  • Gas emits less than coal and oil, so it can bridge the move to cleaner energy. It can serve urea plants, city gas networks and LNG trucks.
  • But 10–20-year contracts can lock India into fossil fuel. They must be balanced against the 2070 net-zero goal and the 500 GW non-fossil target for 2030.

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