In what could open up an alternative and more affordable route for the country to import fuel and strengthen energy security, New Delhi has sought entry into Shanghai Cooperation Organisation (SCO), an elite club of Asian and European oil-producing nations. By becoming a full-fledged member of SCO, India could get access to the region’s crude and reduce its reliance on supplies from West Asia and Africa, which form the bulk of Indian crude imports at present.

The government has also approached the US for shale gas shipments, eyeing the price advantage this relatively new source of energy could bring.

?India has just an observer status in this club. Now we have requested membership. It would help not only in sourcing fuel but also in cross-border acquisition of energy assets,? said a government official privy to the talks. The petroleum and external affairs ministries were currently holding talks with SCO, the official added.

SCO has a broad mandate for cooperation, with emphasis on trade, energy and economy, among member states Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. China, a major oil importer, is also a member of the club.

Import of shale gas from the US, where the commodity fetches about a fourth of the global spot market price, promises an affordable fuel linkage to India’s power, fertiliser, petrochemical and steel companies. The fall in domestic gas output has created a fuel and feedstock crisis for these industries.

Russia, a member of the SCO, now supplies hardly 1% of India’s 164 million tonnes of crude oil imports, which has been expanding at an average rate of 10.6% over the last five years. West Asian producers like Saudi Arabia, UAE and Iran account for two-thirds of India’s total oil import, which meets 80% of the country’s oil requirement.

For gas, India is pinning hopes on the US. It has recently asked the US for shale gas supplies and detailed negotiations are expected to follow soon, said an official with one of the ministries. ?If the US agrees to export shale gas, it could cool down prices in the Asian gas market. Cost of LNG imports for Indian customers could come down from $15-16 per mmBtu to $8-9 per mmBtu,? said the official. India imported 6.7 million tonnes of liquefied natural gas (LNG) in the April-November period this year. The country has LNG import facility for 13.5 million tonnes a year and is building more LNG terminals.

The glut in shale gas production in the US has prompted many of its energy firms to consider cooling the gas into liquid form before shipping it overseas. However, the US shale gas industry is ill-equipped to export gas in the absence of sufficient gas liquefying terminals. Many firms such as Dominion Resources and Cheniere Energy are planning to build such terminals.