WASHINGTON: Energy-hungry India, which invested nearly $ 4 billion in US’ tight oil and shale gas sectors from 2008 to 2012, has strongly advocated the export of American natural gas to it, saying it presented a “win-win” co-operation opportunity for both nations.
“As shale gas has become economically viable to produce, the US has emerged as one of the world’s most important gas producing countries,” Indian Ambassador to the US Nirupama Rao said, while speaking at the American Enterprise Institute (AEI), a Washington-based think-tank.
“Growth in shale gas production in the coming years is now expected to substantially reduce, if not eliminate, the need for the US to import natural gas, and companies are instead looking to reach new markets beyond electric power, industrial and residential uses, both in the US and overseas,” she said.
Rao strongly advocated the case for export of US natural gas to India.
“The potential of exports of natural gas from the US, on account of its linkage to the Henry Hub (HH) prices, would imply considerable savings in terms of landed costs in a country like India. We estimate that these savings would be in the range of $ 4-5 per million metric British Thermal Units (mmbtu),” Rao said.
She pointed out that according to the Energy Information Administration (EIA) of the US Department of Energy, in a few years time, around 2020, the total production of natural gas in the US will exceed domestic consumption.
“This scenario opens up the possibility of the export of liquefied natural gas (LNG) cargoes from the US to other energy scarce countries, including India, where there is significant untapped potential for natural gas demand in all end use segments,” she said.
“This would result in cheaper electricity, lower subsidies on urea and other nitrogenous fertilizers, and a more economical fuel for a variety of industrial and consumptive gas usages. Thus, there is a clear and present benefit to India, if exports of US natural gas are permitted to India,” the Indian ambassador to the US said.
“The point that I would like to stress is that the advantage is mutual and that natural gas exports represent a ‘win-win’ co-operation opportunity,” Rao said.
According to another EIA study, roughly 20 per cent of the $ 133.7 billion invested in US tight oil and shale gas from 2008 to 2012 has come from abroad, with Indian companies accounting for a total investment of nearly $ 4 billion so far.
These investments represent more growth, jobs and progress for the US economy and should, in my view, be welcomed, Rao said.
Meanwhile, influential Congressman Joe Barton voiced support for export of natural gas to American allies, saying it would enhance US’ power and influence.
“Allowing exports of American natural gas, and possibly even oil, would further enhance our power and influence, strengthening our relationships with allies and weakening the control of adversaries such as Iran,” Barton, Chairman Emeritus and longest serving Republican on the Energy and Commerce Committee, said during a Congressional hearing.
“The increase in oil and gas development is strengthening our economy here at home by supporting nearly 9 million jobs and sending more than 30 billion dollars to the Federal Treasury every year. It is the bright spot in an otherwise gloomy economy,” he said.
Barton made the remarks in his submission before the Congressional hearing on “American Energy Abundance: Exports and the Changing Global Energy Landscape”.
“Our allies around the world benefit because they can diversify their supply and decrease their reliance on OPEC nations. Together, we benefit knowing the safety and security of our energy supply will not be subject to the whims of adversaries seeking to use energy as a political weapon,” Barton said.
Rao, emphasising on the cooperation between India and US in the sector, said, Indian companies have invested heavily in the US.
“Already, we have invested significantly in the liquefaction terminals that are likely to come up in this country,” she said.
The Gas Authority of India Limited (GAIL), has executed an LNG off-take agreement with Sabine Pass Liquefaction LLC, Lousiana, a subsidiary of Cheniere Energy, for import of 3.5 million metric tonnes (mmtpa) per annum LNG from the USA on FoB basis, she pointed out.
The commencement of supply is expected to start from 2017-18.
Recently, GAIL has also booked 2.3 mmtpa capacity in the Cove Point LNG Terminal proposed to be commissioned by Dominion Cove Point LNG LP in 2017.
During the recently concluded LNG 17 Conference at Houston, India’s Petronet LNG Ltd and United LNG LP, have entered into a conditional agreement to supply LNG from the Main Pass Energy Hub LNG project in the Gulf of Mexico, with the final agreement expected to be concluded by year end.
“Thus, by late 2017, on the assumption of DoE approvals, we are already looking at a scenario of 0.5 TCF/annum of LNG exports from US to India, which is nearly 75 per cent of our current yearly imports of natural gas from all sources,” she said.
Indian companies are scouting for more tie-ups and ownership stakes in the 19 odd terminals which have applied for export of natural gas to non-Free Trade Agreement (FTA) countries.
Other Indian companies, including Reliance Industries Limited in the private sector, have bought stakes in oil and gas exploration and production companies, a trend which will receive a huge boost if export of natural gas is permitted to India.
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