Natural gas prices on the Multi Commodity Exchange spiked 18.3% over two weeks in April-May 2026, touching Rs 350 per mmBtu, as India's power sector significantly ramped up gas-based generation to meet record electricity demand driven by an early and intense summer heatwave. Peak power demand crossed 280 GW for the first time, exceeding grid capacity in several states and necessitating gas-fired peaking plant operations.
India's gas distribution companies including GAIL, Petronet LNG and Gujarat State Petronet saw their procurement costs surge, raising concerns about pass-through to industrial and commercial consumers. The government asked power generators to maximise gas use over expensive coal imports, prioritising energy security over cost considerations during the peak summer months when grid stability is paramount.
Global LNG spot prices also firmed up in May as Asian buyers, led by China, Japan and South Korea, competed aggressively for cargoes ahead of the summer cooling demand season. The global LNG market remains tight due to limited new liquefaction capacity additions and strong demand from Europe which continues to import record volumes of LNG to replace pipeline gas from Russia. India's LNG import volumes are expected to increase 15% in FY27 as new regasification capacity comes online.
