India can save $1 bn in crude imports by replacing 10% diesel with LNG

Reducing liquid-fuel demand will lower exposure to global oil price shocks as India remains heavily dependent on imported crude oil, said the country's petroleum regulator

India could save $1 billion in crude oil imports annually if the country switches 10 per cent of its diesel usage in the transport sector to liquefied natural gas (LNG), according to a case study done by Petroleum and Natural Gas Regulatory Board (PNGRB).

 

Drawing a strong case for boosting LNG usage in heavy-haul transport, the regulator said India holds the scope to switch 30-40 per cent of diesel vehicles to LNG in the next five-seven years by replacing intra-city or inter-city buses, heavy-haul mining machinery, and haul trucks.

 

India consumed 91.4 million tonnes (mt) of diesel during 2024-25 (FY25), out of which 62 mt was consumed in the transport sector.

 

 

“If we consider a case of 10 per cent of diesel-fuelled vehicles being converted to LNG, 6.2 mt diesel, which is equivalent to 5.9 mt of LNG, would be displaced by the latter, which at current prices of Brent, at a rate of $60 per barrel-linked LNG contracts, would cost close to $2.5 billion. So, considering savings of 22-30 per cent, the savings in crude import bill would be to the tune of $1 billion per annum,” PNGRB said in the case study.

 

Switching 10 per cent of vehicles from diesel to LNG would yield savings of about ₹528 per million British thermal unit (mBtu), which translates to ₹14,000 crore annual savings for end consumers, it added.

 

“The end consumers experience the fuel market in a manner where purchase decisions are driven primarily by out-of-pocket operating costs and the expenses they can bear. If a switch to LNG offers a substantial cost advantage, it clearly establishes a strong business case,” the regulator said.

 

As of now, LNG consumption in the sector is close to 50,000 tonnes per annum (tpa). However, with the required thrust, it has a potential to achieve a sizable market of around 6 million tonnes per annum (mtpa) by 2030, said PNGRB.

 

Rapid expansion of gas infrastructure in India over the past few years has strengthened the case for LNG as a transport fuel. Reducing liquid-fuel demand would also lower exposure to global oil price shocks as India remains heavily dependent on imported crude oil.