The Asian market is becoming lucrative for LNG exporters as the region emerges an engine of global economic growth post-recession. Countries like Japan, China, South Korea and Taiwan are stepping up LNG imports to meet their ever- increasing demand for the clean fuel. However, India is unable to utilise the import window to satiate its suppressed natural gas demand due to the issue of affordability, especially for the largest gas consuming sectors like power and fertiliser where end prices are being regulated.

India consumes about 170 million standard cubic meters per day (mscmd) of natural gas. Against that, the domestic production is just 130-140 mscmd. The gap is met through imported LNG. However, the country’s natural gas demand is growing at a fast pace and is projected to reach 380-400 mscmd by 2015-16. Against that, the domestic production of natural gas is projected at 200 mscmd, which leaves a gap of 180-200 mscmd that can be filled with imports only.

But there is a difference between the projected demand and the actual demand. The demand potential may not materialise if the industry finds the price unaffordable. ?What is important is the demand that can be actually monetised?, BC Tripathi, chairman and managing director, GAIL India, told FE.

The global availability of LNG has also improved significantly in recent years due to commercial production of shale gas in the US and commissioning of new gas liquefaction facilities in countries like Qatar, Australia and Canada. The US, which used to be a big LNG importer earlier, has become a net exporter of the fuel, thanks to the commercial production of shale gas in the country. It has already started exporting unused LNG to Europe and South East Asia. However, India is unable to tap this LNG to meet the fast-growing natural gas demand of its industry.

According to BP Statistical Review 2011: ?Global natural gas trade increased by a robust 10.1% in 2010. A 22.6% increase in LNG shipments was driven by a 53.2% increase in Qatari shipments. Among LNG importers, the largest volumetric growth was in South Korea, the UK

and Japan.?

It is still not clear if India will be able to tap the US LNG in coming years or not. ?It is much too early to say how the US shale gas production will affect LNG trade in India?, P Dasgupta, a former chief executive officer and managing director of Petronet LNG, an LNG trading company.

India has envisaged increasing the share of natural gas in its primary energy consumption to 20% by 2025. But with the domestic production of natural gas unable to keep pace with the demand and imported liquefied natural gas (LNG) too costly to fill the gap in local supply, the target might well remain elusive.

The global spot LNG prices, which crashed to $5-6 a mmbtu from the $20-23 level in the wake of the global recession in September 2008, have fairly recovered. The fossil fuel has got a big boost thanks to the Fukishima nuclear disaster, with key energy consumers increasingly looking at natural gas as an alternative fuel option to meet their energy consumption while keeping in check emissions.

The widespread expectation that the abundance of shale gas in the US, a key LNG importer earlier, would put pressure on international LNG prices has also failed to materialise.

Japan’s LNG imports hit an all-time high in August as the country moved to step up generation from natural gas-based power plants to make up for the loss of electricity supply from nuclear plants. China, another big energy consumer in the region, has also stepped up LNG imports. The natural gas consumption in the country is projected to grow by 22% in 2011. It consumed 106 billion cubic metres of natural gas last year. South Korea and Taiwan are heavily dependent on

imported LNG to meet their energy requirements.