Gas Pricing Reform in India: Implications for the Indian gas landscape Executive Summary

Most discussion on the future of the market for internationally traded gas focuses on the ‘swing towards Asia’. Specifically, China and India, the world’s two most populous nations, are frequently highlighted as major drivers of future demand. Yet, there is considerable ambiguity over the assumptions underpinning this observation, particularly with regards to India. The reason for this lack of clarity is that the Indian gas sector is broadly characterised by two moving parts: one which has prices and quantities set by the Indian government, and another which utilises gas at market (LNG import) prices. Additionally, there is some overlap between the two, further complicating attempts to assess these as separate markets. The lack of a clear pricing signal therefore makes it difficult to determine future levels of demand.