Indian Companies Securing LNG Abroad to Meet Domestic Demand

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Researched by Industrial Info Resources (Sugar Land, Texas)--Energy-starved India's demand for liquefied natural gas (LNG) is growing at a tremendous rate. Because of the high costs and declining reserves of naphtha, the power and fertilizer industries of the country are turning to LNG for their feedstock. Currently domestic resources are only able to supply only 95 million of the 179 million metric standard cubic meters per day (mmscmd) required for domestic use. Although LNG production is expected to reach 190 mmscmd by 2009 when new gas fields come on stream, importing is the only way to bridge the current gap between domestic supply and demand.

Petronet (New Delhi) plans to obtain 7 million to 12 million tons per annum (TPA) of LNG from coal bed methane (CBM) projects in Australia. It intends to join these projects and will bid for gas blocks in the next licensing round. Meanwhile, Petronet is also negotiating with ExxonMobil Corporation (NYSE:XOM) (Irving, Texas) to buy its share of 3.75 million TPA of LNG from the Gorgon Project in Australia. Gorgon LNG will be brought in through Petronet's new regasification terminal at Kochi, Kerala. The terminal will be commissioned in 2011 with shipments expected to begin in 2013.

Petronet has been importing 5 million TPA of LNG from RasGas Company Limited (Doha, Qatar) as part of a long-term agreement and the quantity will increase to 7.5 million TPA from 2009. To further increase its LNG stock, Petronet is also negotiating with Trinidad and Tobago, Qatar, Oman, Egypt, and Algeria to sign long-term agreements. These sources will feed Petronet's Dahej, Gujarat terminal whose capacity is set to expand from 6.5 million to 10 million TPA by December 2008.

GAIL (New Delhi), along with Australia's Arrow Energy (Brisbane, Queensland), is in talks with China Gas Holdings Limited (Kowloon, Hong Kong) to form a three-way joint venture to develop the latter's CBM projects in China. The joint venture is likely to be formed only after China Gas has completed evaluation of its data.

The Indian unit of Britain's BG Group (Reading, Berkshire), BG India Energy Services Limited, intends to sell LNG to India later this year. They are presently talking to Petronet and Royal Dutch Shell (The Hague, The Netherlands) to use their regasification terminals at Dahej and Hazira, Gujarat respectively. The LNG would be sourced from BG Group's LNG projects in Egypt and Trinidad and Tobago.

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