The country's liquefied natural gas (LNG) imports jumped 20 per cent year-on-year in the first half of this year on strong growth in demand, S&P Global Platts said on Thursday.
It expects imports from the US market to increase in coming years to meet the increasing demand.
"India's LNG imports jumped by 20 per cent in the first six months of 2018 as compared to same period last year due to strong growth in demand," S&P Global Platts' director, LNG market development, Marc Howson, told reporters here.
With the government taking proactive steps to ease infrastructure bottlenecks and push for gas as penetration in energy mix, Howson said LNG is the only option in boosting the country's gas demand in the next few years.
The country imports nearly 60 per cent of LNG from the Middle East and the rest from Australia, West Africa and the US, the global energy, metals and commodities information provider said.
In the world market, China, ranked second, witnessed 50 per cent growth in LNG imports, while India was ranked as the fourth largest importer of LNG, Howson said.
"We see higher imports from the US market in coming years. The LNG imports from US market is relatively small at 5 per cent at present, which could well grow as US projects ramp-up in the coming years. The US LNG prices are also still competitive to spot price of LNG in India," he said.
The country has over 20 million tonne (mt) of contracted LNG, of which six mt is from the US. The country has contracted to buy $ 2 billion of US LNG annually for 10 years, S&P Global Platts said.
Howson said the country's gas market has relatively low penetration of around 6.5 per cent of energy mix as against government's target of 15 per cent by 2020, due to inadequate infrastructure of pipeline for LNG expansion.
He pointed out that the LNG contracted volume and length of the derivatives contracts have drastically declined over the last decade.
Historically, the majority of LNG contracts were priced indexed to oil prices, but now more contracts are being priced indexed to gas benchmarks, Howson said, adding that as gas markets become more volatile and buyers have less opportunity to pass through costs in regulated pricing, the importance of gas price hedging has grown.