ONGC set to foray into imported liquefied natural gas business by Q4FY26

Eyes Henry Hub and West Asia for spot deals, plans to cater to city gas sector

State-run Oil and Natural Gas Corporation (ONGC) is all set to foray into the imported liquefied natural gas (LNG) business by the fourth quarter of 2025-26 (Q4FY26), sourcing gas from Henry Hub or West Asia on spot deals to cater to the city gas distribution (CGD) sector, a senior ONGC official said. Henry Hub is a natural gas pipeline hub located in Erath, Louisiana.

 

The company is planning to source 3 million tonnes per annum (mtpa) of LNG by FY27, with the option to go for long-term, low-priced sourcing deals, said Arunangshu Sarkar, director of strategy and corporate affairs at ONGC. Through this, the company will come in direct competition with players like GAIL (India) and Petronet LNG. ONGC already has a 12.5 per cent stake in Petronet along with partners like Bharat Petroleum Corporation Ltd (BPCL), GAIL (India), and Indian Oil Corporation Ltd (IOCL), who too hold the same amount of stake each.

 

“Projections indicate that by 2030, natural gas demand may reach approximately 210 billion cubic metres (BCM), requiring LNG imports of nearly 124 MTPA to meet the shortfall. This highlights a substantial supply gap and underscores the need for strategic intervention. In this context, we are actively exploring opportunities in the LNG business," Sarkar told Business Standard. 

 

“We have a mandate to secure around 3 MTPA of regasified LNG (R-LNG), which may be sourced through spot market deals from hubs such as Henry Hub or the Middle East (West Asia)," Sarkar said.

 

He added that the plan was to start with spot deals within the next two quarters, and the company might opt for long-term deals later. India's annual natural gas requirement stands at approximately 70 BCM, of which around 30 BCM is currently met through LNG imports. Presently, natural gas accounts for around 6.7 per cent of the country's energy mix, and there is a national target to increase this share to 15 per cent by 2030.

 

"As the share of gas in the energy mix rises, overall demand is expected to grow significantly. The CGD network is also undergoing rapid expansion, further driving demand. We have a plan to supply it especially to the key CGD sector. For that particular sector, we are planning to go for a long-term, low-priced deal. We are in the process of getting approval for that," Sarkar said.

 

LNG terminals expanding

 

Analysts say ONGC's plans to enter the R-LNG business come at an opportune time when LNG terminal capacities are expanding in India. "HPCL's Chhara terminal was commissioned in January. The nearest project completion on the horizon is Petronet's expansion of Dahej terminal to 22.5 MTPA in the next three-four months. Subsequently, GAIL's expansion of Dabhol's capacity to 6.3 MTPA will complete by mid-2027, which is also roughly when Petronet's greenfield terminal in Odisha's Gopalpur will come up," an analyst said on the condition of anonymity.

 

India currently has eight operating LNG terminals, of which state-owned Petronet’s 17.5 MTPA facility in Gujarat's Dahej is the largest. The rest have capacities of 5 MTPA each. Of these, Petronet operates a terminal in Kochi, while GAIL, IOCL, and HPCL run terminals in Maharashtra's Dabhol, Tamil Nadu's Ennore, and Gujarat's Chhara, respectively. In the private sector, Adani Total Gas operates two terminals at Mundra in Gujarat, and Dhamra in Odisha, while Shell operates a facility at Hazira in Gujarat.

 

Petronet controls 50 per cent of India's 52.7 MTPA R-LNG capacity, and most of its capacities are currently tied, the analyst pointed out. According to a Crisil report from January, Petronet’s capacity at Dahej is almost tied up through take-or-pay contracts or tolling agreements. "Of the total tied-up capacity, 7.5 MTPA at Dahej and 1.42 MTPA at Kochi are under take-or-pay contracts with suppliers/customers. Additionally, 8.25 MTPA is under tolling arrangements,” the report said.

 

"Beyond Dahej, most R-LNG terminals have struggled with low capacity utilisation due to insufficient pipeline connectivity, a gas market that is still developing, and lack of coordinated planning. But another crucial factor is the limited number of long-term contracts signed between terminals and major offtakers. A large and experienced entity like ONGC can easily strike a deal for regasification capacity," an industry expert said.