India’s energy sector is flashing a two-speed signal to Middle East suppliers: While refining giants are set to post strong revenues — securing their ability to pay for crude imports — the much-hyped city gas sector is seeing volume growth slow, raising questions about the pace of LNG adoption.

India’s downstream players are expected to see aggregate EBITDA rise about 17% y-o-y in the October-December quarter (3Q FY2025/26), ANI reports, citing a sector note by brokerage firm Nuvama.

Fuel retail margins remained elevated but moderated compared to last year. Average diesel retail margins were around INR 5.5 per liter, down roughly 37% y-o-y, while petrol margins stood at about INR 10.7 per liter, a 17% y-o-y drop, the newswire added.

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Why it matters: Stronger balance sheets for Indian refiners mean stability for their primary crude suppliers in Saudi Arabia, the UAE, and Iraq, even as global crude prices soften.

The gas warning: For Qatar and the UAE — India’s key LNG suppliers — the quarter offers a reality check. While City Gas Distribution (CGD) earnings are up 5%, Nuvama flagged that volume growth, particularly in CNG, remains “modest.”

The disconnect: The sluggish immediate growth contrasts with the government’s aggressive target to expand to 18k CNG stations by 2032. If volume uptake lags behind infrastructure rollout, Indian buyers may remain price-sensitive on spot LNG cargoes, dampening hopes for a rapid demand spike.

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