India Doubles Down on U.S. LNG in $1.4 Billion Trafigura Deal

India is locking in long-term liquefied natural gas (LNG) supplies from the U.S. as it scrambles to fuel its booming economy—and rebalance trade relations with Washington. State-owned Indian Oil Corp just inked a five-year deal with commodity trader Trafigura to import 2.5 million metric tons of American LNG, worth an estimated $1.3–$1.4 billion. The agreement signals a strategic shift toward U.S. energy partnerships as New Delhi seeks alternatives to volatile Middle Eastern and Russian supplies.

The Mechanics of the Deal

Under the contract, Trafigura will deliver 27 LNG cargoes between late 2024 and 2029, with pricing pegged to the U.S. Henry Hub benchmark—a first for Indian Oil. Three to four shipments will arrive in 2024 before scaling up to six per year. The deal comes as India, the world’s fourth-largest LNG importer, consumed a record 26.58 million metric tons in 2023, according to Kpler data. With domestic demand outstripping production, analysts expect more such agreements.

“This isn’t just about energy security—it’s geopolitical arbitrage,” says a Mumbai-based energy analyst. “India gets stable pricing, the U.S. reduces its trade deficit, and Trafigura pivots cargoes away from China’s sluggish market.”

The Bigger Picture: Trade and Taxes

The Trafigura deal fits into a broader pattern. The U.S. has become India’s second-largest LNG supplier, and New Delhi is reportedly considering axing import taxes on American gas to further boost purchases. The move would help narrow India’s $35 billion trade surplus with the U.S., a persistent friction point. Meanwhile, GAIL India is negotiating for a stake in a U.S. LNG export project and a separate 15-year supply contract—hints at a deeper energy marriage between the two nations.

Traders note that some LNG originally destined for China could be rerouted to India, where demand is growing at 5–6% annually. As one Singapore-based trader put it: “When China sneezes, India reaches for the tissues—and the checkbook.” With its economy projected to grow 7% this year, India’s hunger for affordable, reliable energy shows no signs of abating.