Material Insights · Understanding the Material World

Gas pipelines and city gas and LNG chain

In India, about half the gas consumed arrives as LNG, and regasified LNG only reaches users if the pipeline grid connects the coastal terminal to them. Terminal capacity and pipeline reach therefore have to grow together, with city gas a fast-growing customer.

Gas pipelines and city gas (energy) and LNG chain (energy): 4 relationships.

How they are linked

1. Regasified LNG into the grid

Physical flow · Strong · LNG terminals to pipelines and city gas

LNG is warmed back to gas at coastal terminals and then has to travel by pipeline to inland users, so every terminal depends on grid connections.

  • 53.5 MMTPA India's regasification capacity at 8 terminals, March 2026
  • 27,905 km India's operational natural gas pipeline network, March 2026
  • about 50% share of India's gas consumption that is imported, 2025-26

India imported 34,216 MMSCM of LNG in 2025-26, about 4% less than the 35,720 MMSCM of the year before, against consumption of 68,542 MMSCM. About 80% of the authorised 34,803 km pipeline length was operational in March 2026, so some regions still cannot be reached by imported gas.

Sources: Petroleum and Natural Gas Regulatory Board

2. City gas as customer

Transition · Rising · City gas growth draws on LNG

City gas networks supply piped gas to homes and CNG to vehicles, and with about half of India's gas imported, extra city gas demand leans on LNG.

  • 17,061 MMSCM city gas sales, 2025-26, up about 10% on the year and about a quarter of India's gas use
  • 307 authorised city gas areas
  • 1.69 crore domestic piped gas connections, March 2026

CNG stations rose from 8,067 in March 2025 to 8,916 in March 2026. City gas networks can only draw on imported gas once trunk pipelines reach their area.

Sources: Petroleum and Natural Gas Regulatory Board

3. Price link: supply source

Cost and price · Strong · Both ways

LNG imports supply city gas in Japan, India and Europe, so delivered gas prices follow LNG with a lag.

  • 0.18 monthly change correlation
  • 0.62 12-month change correlation
  • 2 months lag at which the link is strongest

The Japan LNG price correlates with the delivered gas proxy at 0.62 for yearly moves but only 0.18 for monthly moves, because contract formulas and regulated tariffs pass costs through slowly.

Sources: Material Insights (World Bank, FRED, IMF data)

4. Seaborne supply risk

Shared risk · Medium · LNG disruptions to pipeline users

Pipeline and city gas customers in import-dependent markets inherit the risks of LNG supply, such as plant outages or blocked shipping routes.

  • 437 Mt world LNG trade, 2025
  • about 16% Qatar and UAE share of world liquefaction capacity, both taken off the market for periods in 2026

World LNG trade grew from about 411 Mt in 2024 to 437 Mt in 2025, but the Middle East conflict in 2026 took Qatar and the UAE off the market for periods, and missile strikes on Qatar's Ras Laffan complex were expected to keep about 12.8 Mtpa offline for three to five years. Where a grid has no storage or alternative supply, such disruptions show up as higher prices or cuts to gas users.

Sources: International Gas Union; Oil and Gas Journal (on IGU World LNG Report 2026)

For investors

Key learnings

  1. India's 53.5 MMTPA of regas capacity is only as useful as the pipelines leaving each terminal, so pipeline completion drives terminal use.
  2. City gas sales of 17,061 MMSCM in 2025-26 make it a large and growing outlet for imported gas.
  3. Delivered gas prices follow LNG with a lag of about two months in the site data, so LNG price spikes hit city gas margins before tariffs adjust.

What to track

  • LNG imports and regas terminal use: Rising imports with flat capacity point to tighter terminal slots (Monthly · PPAC; PNGRB)
  • Operational pipeline length against authorised: Faster completion opens new markets for imported gas (Quarterly · PNGRB)
  • Asian spot LNG price (JKM): Higher prices squeeze city gas margins and industrial demand (Daily · S&P Global Platts)

For policymakers

Key learnings

  1. About half of India's gas is imported, so expanding city gas raises LNG import needs unless domestic output grows.
  2. Building terminals without connecting pipelines strands capital; trunk lines and city gas licences need to be planned together.
  3. The 2026 strikes on Qatar's Ras Laffan complex, expected to keep about 12.8 Mtpa of liquefaction offline for three to five years, show the value of storage and diverse contracts.

What to track

  • Gas import dependence: A rising share increases exposure to world LNG prices (Monthly · PPAC)
  • City gas connections and CNG stations: Measures whether the city gas rollout is reaching users (Quarterly · PNGRB)

India

India had 8 LNG terminals with 53.5 MMTPA of capacity and 27,905 km of operating pipelines in March 2026, and imports about half of its gas.

Sources

  1. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  2. PNGRB Statistical Booklet, September 2026, Petroleum and Natural Gas Regulatory Board (2026)
  3. 2025 World LNG Report press release, International Gas Union (2025)
  4. Global LNG trade hits record in 2025 as 2026 tests market resilience, Oil and Gas Journal (on IGU World LNG Report 2026) (2026)