Analysts say gas prices are about to crash. India still can't afford to celebrate

**Rishabh Varghese** (0:01)
Last week, Oil India made an important discovery. The state-owned company announced that it had found a new supply of natural gas in the Andaman offshore region. This was, in fact, the second of three wells drilled in the block to confirm the presence of gas during the company's exploration of the Andaman basin. And for a country like India, which is heavily dependent on imports for its energy needs, this news is strategically very significant. Hardeep Singh Puri, the Minister of Petroleum and Natural Gas of India, even called the discovery an ocean of energy opportunities in a tweet celebrating the same.
Now, commercial production is still several years, close to a decade away, with appraisals and studies taking place to assess the commercial viability of the reserve and if it can even be extracted economically. Still, like I mentioned earlier, this isn't the first discovery in the Adaman Basin. And multiple discoveries like this are hinting at the fact that this area might just become a new promising energy region for the country. As we all know very well by now, India has been having a tough time with its energy imports since the war on Iran escalated at the end of February this year and the Strait of Hormuz closed. Especially after the intensity of the LPG crisis that hit most Indian households in mid-March, which my co-host Snigdha covered in an episode back then, by the way, the truth was very difficult to ignore. That India is far too dependent on other countries for its fast increasing energy needs and any disruption was always going to put it in a position like this.
In a crisis, panicking and scrambling to find alternatives. But while the ongoing war has created a situation of scarcity for crude and natural gas right now, analysts are now discussing that it's also created the conditions for an excess of LNG and an eventual buyer's market. In an opinion piece for Bloomberg last week, Javier Blas, a commodities columnist, argued that what he called an LNG glut is inevitable. The closure of the Strait of Hormuz, while it did trigger a short-term scarcity, actually also accelerated what analysts are calling a significant price correction.
Because now, on the demand side, all the consumers who had been dependent on the supply from the Gulf have been choked off and they have had to diversify to sources like solar and coal. Meanwhile, on the supply side, an increased investment in projects elsewhere has also increased the sourcing from outside of the Gulf. And while both might sound like good news for India, which is the discovery of domestic supply and cheaper import opportunities, both actually complicate each other in ways that could be less helpful than you'd think.
Welcome to Daybreak, a business podcast from The Ken. I'm your host, Rishabh Varghese, and every day of the week, my co-host Snigdha Sharma and I will bring you one new story that is worth understanding and worth your time. Today is Wednesday, the 10th of June.
In the weeks following the conflict escalating, LNG prices in Asia more than doubled. From being about $10 per unit pre-crisis, the prices went up to about $25 by late March. Reports everywhere screamed shortage. Asia and Europe were both left hunting down alternatives.
The reports screaming shortage made sense, because you see, the US Energy Information Administration even reported that the closure of the strait affected approximately 20% of global LNG supplies. But right before the wall, things were very, very different.
A report from the IEA or the International Energy Agency that was updated just last month confirmed that last year, 2025, saw a record-breaking surge in FIDs or final investment decisions. FIDs, by the way, is basically the point of no return, when a company commits to a project plan and assigns the capital for it. This is when the construction begins, contractors are hired, and everything is put into motion. The report said that the global gas market is on the verge of a new wave of LNG supply. The surge in FIDs has actually been something that's been going on since 2019, which was briefly interrupted in 2020 due to the pandemic. The new wave the report refers to is supposed to take place between 2025 to 2030 Blas argues that the Hormuz closure has delayed it by roughly a year, but has not cancelled it. A total of about 345 BCM or billion cubic meters of new LNG export capacity is supposed to come online from the projects that reached FID and were under construction at the start of 2025 This is reportedly the largest LNG capacity addition wave to date. You see, last year, global production was about 600 BCM. As Blas writes in his piece, there's also a pipeline of over 700 BCM of projects seeking FID and he states that if everything in that pipeline actually does get built out, global LNG supply will more than double.