India’s natural gas requirement to be 120 BCM by 2015
India’s natural gas requirement is likely to swell to over 120 BCM by 2015, the year in which most of gas producing country’s will have expired their supplies contracts with Asian gas guzzlers and thus it is suggested that India further tightens its diplomatic ties with gas producing nations to ensure that adequate gas supplies are hedged for India even with higher prices, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
The price suggested by the chamber for securing long term gas contracts should be with the range of between US $ 12-14/ MMBtu, since most of Asian gas buyer have aggressively started negotiating long term gas deal with gas producing nations. Currently the spot gas price at which India is buying is on an average US$10-11/ MMBtu.
In a recommendatory note, to be submitted to Ministry of Petroleum and Natural Gas, the ASSOCHAM has said that India’s domestic gas requirement currently stands at 35 BCM, most of which is met through indigenous production. Since in next 7 years, the requirement is going to go up by about 85 BCM, India would have to resort to larger imports for natural gas since the domestic gas production is unlikely to accelerate at substantial speed.
The ASSOCHAM President Mr.Venugopal N. Dhoot pointed out that It is in view of above, the Chamber has mooted a proposal, stressing that it would be opportune time now for India that it cements its diplomatic ties with gas producing countries whose gas supply contracts with countries like Japan and Korea, holding almost 45% of long term contracts, are coming to an end in 2015 for fresh renewable.
It is estimated that India’s LNG import will rise around 70 BCM by 2015. The consumption of natural gas grew at CAGR of 7.8 per cent in the period 1997 – 2007, supported by rise in availability though domestic and imported sources of gas. Natural gas accounts for 8 per cent of current energy consumption. The domestic production is expected to grow 40 BCM in 2010 to 55 BCM by 2015, with a gap of 65 BCM to be met though imports.
Resource-short countries Like Japan and Korea have traditionally relied on long term LNG contracts to meet its domestic requirements and collectively accounts for 80 Per cent of LNG import in the region. The ASSOCHAM has research found that a significant numbers of Japanese and Korean long tern LNG contracts will expire soon, about 45 per cent by 2015. Looking to secure the energy, both the countries will be aggressively try to renew expiring contrasts, even at a higher prices.
The ASSOCHAM chief said that even if India succeeds in hedging a gas contracts now at a recommended price of over US $ 12-14/ MMBtu, it would not loose much.
It is expected that since gas discoveries have already been stuck in KG basin and other surrounding areas as also other places, even if these discovers are realized on time, India would still face about 60-65 BCM scarcity of gas, by 2015. The chamber expects domestic discoveries would give India gas availability to extend of not more then 55 BCM by 2015.
In view of above, India’s dependence on natural gas import would still raise to estimated level of 60BCM, which can be secured from gas producing nations, with advance re- launch of diplomatic initiatives. This is why chamber emphasis that Indian authority should farm up and intensifies its approach in a manner so that gas producing countries release their significant gas supplies towards India.
