India Keen To Boost Energy Imports From US

So far, India has avoided any confrontation with the US at a time when protectionism is steadily rising there. The rise in LNG shipment from the US could somewhat help New Delhi’s cause. Trump has already asked India to increase its imports from Washington.

“We are closely watching this space and are ready with plans to deal with trade and tariff issues... At this point, we do not see any cause to press the alarm button,” Petroleum Minister Hardeep Puri told The Secretariat on the sidelines of an event.

India is keen to increase the share of gas in its energy basket. The US is one of the top suppliers of LNG to India. Besides the US, the chunk of India’s LNG comes from Qatar and UAE. India ranks among the top five LNG importers globally. While more than 40 per cent of India’s LNG comes from Qatar, the US provides more than 15 per cent.

Petroleum Secretary Pankaj Jain recently said that Indian oil majors like Indian Oil Corporation (IOC), GAIL and Bharat Petroleum have initiated talks with American oil biggies to increase LNG imports into the country.

India’s focus on manufacturing growth and its commitment to achieve a stiff target of Net Zero carbon emissions by 2070, among other things, have been pushing the demand for LNG.

Though India has been looking to increase its domestic LNG production, challenges related to delays in implementation of projects and depletion in mature fields, along with other structural issues, have become a cause of concern.

“As such, India has no issues in increasing its energy imports from the US, especially since the domestic demand is continuously rising. So we will definitely need additional supply sources,” an official said on condition of anonymity, adding, “There are existing problems in boosting production capacity, we need to work on this.”

Besides India, the other top importers of LNG are China, Japan, South Korea and Taiwan. Vietnam has also entered the list of LNG importers recently.

India’s LNG Demand 

India’s domestic gas production is not adequate to meet its demand. According to the International Energy Agency, limited growth in domestic supply means India's LNG imports will need to more than double — to around 65 billion cubic meters (bcm) a year by 2030 — to meet rising demand. It has estimated India’s gas consumption to touch 103 bcm annually by the end of the decade.

“There are existing problems in boosting production capacity. We need to work on these,” an official noted.

While construction of fresh pipelines is underway, at many junctures, work has been hindered due to several issues, including land acquisition.

According to BP’s official site, though key regasification facilities (that convert LNG to pipeline gas) at the ports of Dahej, Hazira, Dabhol and Kochi are operational, they can handle only about 20 mmtpa (million metric tonnes per annum) at present, representing about 30 per cent of current gas consumption.

Meanwhile, news agency Reuters, in a report, said that GAIL is also looking to “revive plans to buy a stake in a US LNG plant or secure a long-term US LNG deal, after Washington lifted a ban on export permits for new projects, part of Trump's agenda to maximise US energy development.”

Besides LNG, India has no problems in raising imports of petrochemicals, ethane, propane and butane too from the US, it added.

India’s focus on manufacturing growth and its commitment to achieve a stiff target of Net Zero carbon emissions by 2070, among other things, have been pushing the demand for LNG. But waning domestic production has become a cause of concern, especially as fears rise that the supply channels may be dented due to the ongoing Red Sea crisis.