India, the world’s fourth-largest buyer of LNG, wants liquefied natural gas importers like Japan and Korea to join hands to bring more “equitable” trade deals.
India and Japan, in September 2013, had set up a multilateral group of buyers for LNG to push for lower prices for the fuel and New Delhi is now seeking other importers to join them.
“A number of large Asian LNG buyers including India could benefit by joining hands and thereby bringing in more equitable trade deals,” Oil Minister Dharmendra Pradhan said at 5th IEF-IGU Ministerial Forum held on sidelines of the Petrotech conference here.
While the global gas prices have cooled in line with oil rates in last two years, Asian countries – the biggest buyers of seaborne LNG – sometimes paid five or six times more for the deep-chilled gas than piped gas consumed in North America, where prices have plunged because of growing availability amid a boom in production from shale deposits.
Also, weakening currencies have inflated import bills.
After joining ranks with Japan, India is keen to rope in South Korea and possibly also China in the buyers club.
Pradhan said LNG prices have been soft over the past 18-24 months much in tandem with crude prices and emerging LNG demand-supply interplay.
“We have also seen that LNG contracting mechanism is changing with short term contracts growing and replacing long term contracts,” he said adding analysts believe it will be a buyers market for a while.
LNG buyers, he said, will continue to have options.
Historically, most LNG sold in Asia is bought under long-term contracts linked to crude-oil prices. Oil-linked prices have stayed much higher than piped-gas prices in recent years, and there have been calls for more flexible, spot-market pricing, possibly linked to US gas prices.
India wants to turn an oversupply of LNG to its favour as it seeks to increase use of natural gas in its energy mix to 15 per cent from current 6 per cent now in an attempt to reduce the dependence on crude oil imports.
New Delhi is among the first countries in Asia to renegotiate a long-term deal after the glut pushed down prices. Petronet LNG Ltd in December reworked a 25-year contract with Qatar’s RasGas Co, resulting in prices dropping by almost half.
Prime Minister Narendra Modi has set a target to cut import dependence by 10 per cent by 2022 by boosting domestic production and expanding the market for natural gas and non-conventional energy sources.
The main gas exporters already have their own association, the Gas Exporting Countries Forum, which includes Qatar and Russia among its members, although it has acted mostly as a discussion group.
Pradhan said the world needs even greater cooperation among countries on gas technologies such as shale and gas hydrates. Takkarist McKinley Authentic JerseyShare This