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Opinion
Andy Mukherjee

How Putin Ended Modi’s Cheap Natural Gas Dream

India was encouraging an expensive expansion of fuel networks in its cities with make-believe prices. Then the war happened.

Out of gas?: Modi waiting for Putin to arrive during a visit to India in December 2021.

Out of gas?: Modi waiting for Putin to arrive during a visit to India in December 2021.

Photographer: T. Narayan/Bloomberg

Call it poor judgment or bad luck, but India’s expansion of natural gas coverage to more than 90% of its population couldn’t have come at a worse time. In January, Adani Total Gas Ltd. and others won keenly contested licenses to add new areas to city gas networks; in February, Vladimir Putin invaded Ukraine. Suddenly, billions of dollars in investment are on shaky ground.  

After an extraordinary surge last month, European spot prices of natural gas are stabilizing — at three times the average of the past decade. Contracted supplies of liquefied natural gas are cheaper, but with Europe scrambling to secure non-Russian fuel, the discount is shrinking, according to a Bloomberg News report last week. Worse still, it’s unlikely to be a blip: Credit Suisse Group AG predicts that the Russian gas deficit will lead to an annual global LNG shortage of nearly 100 million tons by the middle of the decade.