The city gas distribution (CGD) sector will emerge as India’s largest natural gas consumer accounting for almost one-third of the total volume by the end of this decade.

The projections form part of the Petroleum and Natural Gas Regulatory Board (PNGRB) report on natural gas projections for 2030 and 2040.

“CGD is set to be the largest natural gas demand driver by 2030, it will account for 29 per cent of total consumption in 2030, and 44 per cent of total consumption in 2040,” the regulator said in the report.

It is expected to account for 50 million standard cubic meters per day (mscmd) of the 110 mscmd incremental demand by 2030 and 129 mscmd of the 198 mscmd increase between 2030 and 2040 in the GtG scenario, it added.

The regulator anticipates that LNG availability at prices below $9 per million British thermal units (mBtu) assumed on a Delivered ex-ship (DES) basis would likely boost demand, considering the price advantage over alternate fuels.

Rising usage

The report projections are based on two scenarios. Good to Go (GtG), which assumes moderate growth and expected developments based on current trends and commitments. While Good to Best (GtB) considers accelerated progress, favourable policy implementation and enhanced investments leading to higher-than-expected growth.

The regulator attributed the rapid expansion of compressed natural gas (CNG) and piped natural gas (D-PNG) infrastructure as the major driver of growth.

While CNG stations increased 9 times since FY14, the number of D-PNG connections increased 5.8 times since FY 14.

The CGD segment is growing with the CAGR of around 12 per cent. It is expected to be the primary growth driver, with consumption projected to grow 2.5 to 3.5 times by 2030 and 6 to 7 times from a base of around 37 mscmd in FY24 by year 2030 and 2040, respectively.

The D-PNG cement is expected to grow continuously as convenience and affordability play big role in major cities and town areas. (even 10-15 per cent premium to LPG may work).

The report said that meeting the minimum work programme (MWP) target and increasing throughput per CNG station will derive natural gas demand. Besides, OEMs are coming out with various CNG models, with adequate boot space to tap the demand.

CNG demand is growing in four-wheeler, light good vehicles and three-wheeler segments. While, private vehicle, passenger and light motor vehicle segments will grow with expansion of infrastructure availability and cost economics, the heavy motor vehicles will gradually shift towards LNG, also boosting natural gas demand.

Besides, the city and town areas will gradually shift towards more convenient and environment fuel, and remote areas will depend on LPG till the network is made available, the report added.

Industrial and commercial

The industrial and commercial (I&C) segment has potential to grow multifold considering concentrated narrative towards a cleaner fuel and competitiveness versus liquid fuels, the report noted.

I&C is expected to grow at a CAGR of 10 per cent under GtG and 15 per cent under GtB scenario in the projected year 2030.

The Industrial segment has a base of 18,700 units and 41,000 units of commercial consumer base with consumption of around 12.7 mscmd in FY24. The throughput of average industrial connection is at 700 scmd, and Commercial connection is 50 scmd (standard cubic meters per day).

As per Industries estimate, there are more than 12,000 industrial clusters within geographical areas (GAs), with potential of 2 lakh small and medium industries and around 1 lakh commercial customers.

“Natural gas can be expected to incrementally replace polluting (and expensive) fuel like Naphtha, FO, LPG, Propane, etc,” the regulator anticipates in the report.

Published on June 14, 2025