Natural gas imports will surpass domestic production in 2 years

Written by Press Trust of India | New Delhi | Updated: Dec 6 2012, 09:03am hrs
India's import of natural gas will surpass domestic production in two years as output from fields like Reliance Industries' KG-D6 field stagnates.

The country's imports of liquefied natural gas (LNG), which costs three times the price of domestic gas, is projected to rise exponentially over the next 2-3 years, according to latest projections made by the Oil Ministry here.

Imports of LNG or natural gas cooled to its liquid form for ease of transporting in ships at 39.32 million standard cubic meters a day constituted 25.5% of the total consumption of the fuel in India in 2011-12.

This share will rise to 41 per cent in current fiscal and to 50% in the next, the ministry's projections showed.

In 2012-13, domestic natural gas production is estimated to be around 104 mmscmd, down from 114.90 mmscmd in the previous fiscal primarily because KG-D6 output has slipped to 23 mmscmd from over 30 mmscmd last year.

In current fiscal, LNG imports will jump to 73 mmscmd and are projected to further rise to 105 mmscmd in 2013-14,equalling the domestic gas production of that year.

In 2014-15, imports at 115 mmscmd will surpass domestic production of 113 mmscmd, the oil ministry estimates said. For a nation whose current account deficit is already battered by 79% reliance on imports for meeting oil needs, higher share of LNG is not be a good news.

Industry officials said the domestic output has stagnated in absence of remunerative prices.

UK's BP which partners RIL in the flagging KG-D6 gas block and other gas discovery areas, recently wrote to oil minister M Veerappa Moily saying around 5 trillion cubic feet of discoveries in KG-D6 and NEC-25 block in Mahanadi basin can be developed on price clarity.

The reserves RIL-BP has are more than the remaining resource in state-owned Oil and Natural Gas Corp's fields.

Majority of domestic natural gas is priced at $4.2 per million British thermal unit which is one-third the price at which LNG is imported by Petronet and other firms.

The government has been resisting revising the domestic prices fearing its impact on power tariffs and fertiliser cost even as KG-D6 output has plummeted to less than half to 24 mmscmd.

Industry officials said that the world over countries have raised price for domestic produce.

Last week, Argentina trippled wellhead price for new natural gas production to USD 7.50 per mmBtu. The South American nation too imported LNG at up to $15 per mmBturate, quite similar to the position in India.

Neighbouring Pakistan too has announced a new exploration policy giving price of $7 for shallow water finds, $8 for deepsea discoveries and $9 for ultradeep exploration.

China too has offered subsidises to energy companies who develop the nation's shale-gas resources.