India Coal Ministry Targets 25 BCM Annual Natural Gas Substitution Through Syngas Retrofit
India's Ministry of Coal has put a number on its coal gasification ambitions, estimating syngas retrofitting could displace a quarter of total annual gas demand.
India's Ministry of Coal has quantified the potential scale of the country's coal gasification programme: retrofitting industrial burners to run on syngas could substitute around 25 billion cubic metres of natural gas per year, the ministry said in a report published Saturday (2026-06-27).3
At current LNG import prices, that volume carries a replacement cost the ministry estimates at ₹99,000 crore to ₹1,17,000 crore annually — roughly $11.5 billion to $13.6 billion at prevailing exchange rates. The programme would also create stable domestic offtake for Indian coal producers, an outcome the ministry highlighted alongside the import substitution figure.3
The announcement comes as Asian LNG spot prices are running well above the levels that make coal-to-gas switching economics favourable for buyers. JKM front-month was at $15.52 per million British thermal units as of Saturday (2026-06-27), elevated after Iranian retaliation to U.S.-Israeli strikes disrupted roughly 17% of LNG export capacity from Qatar, the world's second-largest LNG supplier.2
That supply shock has already reshuffled generation across Asia. In Japan, coal-fired power output jumped 11.1% year-on-year in April while gas-fired generation fell 12.9% to 16,447 gigawatt-hours, according to the Japanese Electricity Market Data Hub. South Korea recorded a sharper swing: coal generation rose 39.7% year-on-year to 10,733 gigawatt-hours in April — the largest increase since August 2019 — while gas-fired output dropped 6.4%, Korea Power Exchange data show.2
India's position in this regional shift is structurally different. Japan and South Korea are LNG-dependent economies managing an acute price shock. India is a coal producer with a long-term interest in reducing imported gas exposure rather than cycling between fuels as spot prices move. The country already draws close to three-quarters of its electricity from coal and has 39 new coal-fired power plants under construction.1
The retrofit pathway the ministry describes matters for the timeline. The 25 BCM substitution target is framed around existing industrial burners that can be modified to combust syngas, not new power generation capacity. That focuses the near-term opportunity on brownfield industrial sites — steel, fertiliser, chemicals — where gas is already consumed and the modification is a combustion chamber swap rather than a greenfield build. Capital requirements are lower; lead times should be shorter.3
Still, India has announced ambitious energy substitution programmes before and seen them slip. Coal gasification projects carry meaningful upfront costs and technical complexity, and the country's earlier attempts at domestic gas development — both conventional and unconventional — have generally underdelivered relative to stated targets. Whether 25 BCM is a credible medium-term displacement or a planning figure that will be revised down as projects advance into engineering is the question the ministry's announcement leaves open.
The external environment is providing pressure in the right direction. With JKM spot near $15.52, every BCM of domestic substitution avoids expensive spot procurement. Newcastle physical coal settled at $125.80 per tonne as of Saturday (2026-06-27), making gasification feedstock considerably cheaper than the LNG it would replace on a calorie-equivalent basis.2
Across the rest of Asia, demand signals for coal remain elevated. Vietnam recorded coal-fired electricity generation of 17,864 gigawatt-hours in April, up 12.3% and a record, driven by an early heatwave, according to government data. DBX Commodities forecasts coal imports from other Asian countries rising 9.4% year-on-year to 31 million metric tonnes.2
The proof of concept for India's programme will come from commissioning pace. The first retrofitted industrial sites running on syngas at scale — with verified cost and reliability data against imported gas — would give the 25 BCM figure empirical grounding. Without that, the substitution potential remains a ministry estimate, not a market supply development.3