Was India’s gas demand weak, or just locked out?

For years, India’s LNG story has had one success and several disappointments. Petronet’s Dahej terminal ran at about 92% of capacity in 2025–26. The other seven terminals — Hazira, Dhamra, Dabhol, Kochi, Ennore, Mundra and Chhara — used roughly a quarter of theirs between them. HPCL’s Chhara managed just 6.2%. In total, about 26 million tonnes a year of regasification capacity sat idle, even as Dahej expanded to 22.5 mtpa.

The usual explanation was weak demand. That explanation may be wrong.

A system built in silos

India’s terminals were not built as a network. Each was a company project, sized for its owner’s own gas portfolio and marketed to its own customers. Four of them — Dahej, Hazira, Mundra and Chhara — compete for largely the same Gujarat hinterland. Spare slots rarely left the company that held them. A capacity holder with its own gas business has little reason to offer room to a rival marketer.

So a city gas distributor, an industrial cluster or a trader looking for a few spot cargoes had nowhere to go except a bilateral negotiation with an opaque price. The demand may have existed. The capacity certainly did. Nothing connected the two.

The test

On 15 October, PNGRB cleared the Indian Gas Exchange to launch a Regasification Capacity Booking Platform. Terminal operators and capacity holders can list unused slots. Buyers can book them, or post what they need. IGX only matches the parties; contracts and payments stay bilateral, and participation is voluntary. The regulator has openly linked the move to poor terminal utilisation, and expects transparent price discovery to bring regas charges down.

HPCL, whose Chhara terminal is the emptiest of all, had already signed an agreement with IGX at India Energy Week 2026 to offer its capacity this way. Chhara is the first place to watch.

The timing matters. PNGRB has already cut pipeline tariffs to two zones, which makes distant terminals more competitive. IGX starts one-year and two-year gas contracts from 19 October. Capacity, molecules and transport are moving into the same visible marketplace for the first time.

What could still go wrong

Access is only one constraint. PNGRB’s August pipeline data shows the pipelines leaving weaker terminals running nearly empty: Dabhol–Bangalore at 24.8%, Kochi–Mangalore–Bangalore at 22.9%, Ennore–Tuticorin at about 7%. A slot booked at Kochi is of little use if the gas can’t reach Bangalore. Regas costs at newer terminals remain high; Nomura estimates ₹83–87/MMBtu for HPCL and IOC terminals at 50% utilisation. And this year’s war-driven price spike cut imports regardless of access.

How we’ll know

Watch the well-connected but under-used terminals: Dhamra, Mundra, Chhara and Hazira. If their utilisation rises faster than pipeline-constrained Kochi and Ennore once listings start, the access thesis holds. India’s LNG problem would then have been a marketplace problem all along — and one that has just been addressed.