US shale gas, technology top India’s energy agenda

Jun 24 2013, 01:11 IST
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SummaryEnergy will be an important part of the agenda as US secretary of state John Kerry meets external affairs minister Salman Khurshid on Monday

Energy will be an important part of the agenda as US secretary of state John Kerry meets external affairs minister Salman Khurshid on Monday. Washington is open to supplying liquefied natural gas (LNG) to New Delhi, though the US will have to tweak its laws for India, which is a non-FTA country.

The top US diplomat, who is on his maiden India visit as the US secretary of state, will on Monday lead the American side for the 4th Indo-US Strategic Dialogue. Kerry's high-level delegation also includes the new secretary of energy Ernest Moniz. The Indian side will be led by Khurshid.

According to Vikram Kumar Doraiswami, joint secretary, Americas, ministry of external affairs, “Shale gas is a very important part of what we want to talk to the US about. We are very interested in the opportunity for expanding our energy cooperation. We already have an India-US Energy Dialogue which is co-chaired by deputy-chairman Montek Singh Ahluwalia and now by the new energy secretary of US. That next round is to take place in India for which the dates will be worked out. So, we will be offering dates for that. But over and above the discourse, this has verticals relating to new and renewable energy, hydrocarbons, coal, power, etc.”

“India’s interest in hydrocarbons is particularly strong now as the US is on its way to becoming a net exporter of energy, both in the acquisition of energy resources and in getting permission to import gas from the US in line with its law, which requires prior clearance of all exports to countries that don't have a free trade agreement (FTA) with it. So, a number of Indian companies have already lined up purchase agreements with US firms, which require to be cleared by the US Department of Energy (DoE). We have continued to flag our interest in this area over the last several months and have been assured that the processes will be taken forward. And indeed we already have one which has come through directly for India whereby gas will be exported to GAIL ,” Doraiswami added.

India is also interested in the US capacity in terms of technology, capital and regulatory experience in managing shale gas.

It also needs to look at whether it has the resources and how best it can be utilised in a manner that secures the interest of its citizens and also deploys the highest possible technology to it. Therefore, this is definitely on the agenda of the secretary of state during the visit.

Through diplomatic channels, New Delhi has been pushing the US to export shale gas to India. The demand-supply gap of natural gas in India, estimated at around 2.2 trillion cubic feet (tcf) per annum at present, is likely to go up to nearly 4 tcf per annum by 2016-17. Recently, GAIL booked 2.3 mmtpa capacity in the Cove Point LNG Terminal proposed to be commissioned by Dominion Cove Point LNG in 2017.

In May this year, the DoE granted conditional authorisation to domestic US producers to export LNG to countries that do not have an FTA with it.

This is a significant development as it opens the prospects of export of shale gas to energy-starved India. For countries that do not have an FTA with the US, the Natural Gas Act directs the DoE to grant export authorisations unless it finds that the proposed exports “will not be consistent with public interest”.

In its 132-page order, the DoE said that the proposed exports are likely to yield net economic benefits to the US.

The DoE’s conditional authorisation has been given to Freeport LNG to export domestically-produced LNG to non-FTA countries from its terminal on Quintana Island in Texas.

The Freeport facility in Texas is conditionally authorised to export at a rate of up to 1.4 billion cubic feet of natural gas a day (Bcf/d) for 20 years. The supply is expected to start from 2017-18.

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