US gas exports set to rise as Trump and Modi boost energy ties

Trump-Modi meeting

US gas exports are expected to benefit significantly following an agreement between US President Donald Trump and Indian Prime Minister Narendra Modi to expand India’s purchase of American energy, according to the Financial Times. As India’s demand for fossil fuels grows, analysts predict a stronger US presence in the Indian market.

Strengthening energy trade ties

During their recent meeting, Trump and Modi agreed to increase US oil and gas exports as part of broader efforts to rebalance the two countries’ trade relationship. While Russia remains India’s largest crude supplier and Qatar dominates liquefied natural gas (LNG) imports, the US has rapidly emerged as a key player, supplying about 20% of India’s LNG needs in 2024.

India’s natural gas consumption is set to rise nearly 60% by 2030, according to a report from the International Energy Agency, with LNG imports expected to more than double. The growing demand aligns with India’s policy to increase natural gas’s share in its energy mix from 6% to 15% by 2030, requiring substantial imports.

Market shifts and trade dynamics

India’s oil and gas minister, Hardeep Singh Puri, acknowledged that India is already purchasing $20 billion worth of energy from the US. He suggested that further purchases could help reduce India’s $35 billion trade surplus with the US. "US hydrocarbon purchases look to be the coin of the realm," said Kevin Book of ClearView Energy Partners, indicating that energy trade could be a key factor in trade negotiations.

Since Russia’s invasion of Ukraine in 2022, India has increased its intake of discounted Russian oil, which accounted for one-third of its crude imports in 2023. However, tougher US sanctions on Russian oil, enacted in January, could limit India’s access to cheaper alternatives and create new opportunities for American suppliers.

Challenges and opportunities for US exporters

Despite the increasing interest in US energy imports, challenges remain. India’s refining infrastructure is optimized for Middle Eastern crude, making a shift to US oil more complex. Additionally, the long shipping distance from the US to India presents logistical hurdles compared to the shorter routes from the Middle East.

However, the US LNG industry is prepared to expand its presence in India, with major suppliers such as Venture Global ramping up production. Following the launch of its Plaquemines liquefaction plant in Louisiana, Venture Global’s chief executive Mike Sabel stated, "We are well positioned and have the capacity to deliver on President Trump’s commitment to supply US allies with additional LNG to meet growing global energy demand."

The future of US-India energy cooperation

As India seeks to diversify its energy imports and meet growing demand, the agreement between Trump and Modi signals stronger bilateral trade ties. The extent of India’s shift toward US energy will depend on global pricing, logistical challenges, and policy shifts in both countries. With an evolving geopolitical landscape and ongoing trade negotiations, US energy exporters stand to gain as India’s energy needs continue to expand.