NEW DELHI: India is to receive its first imports of US shale gas in 2017, a person familiar with the development said on Tuesday, a move that is expected to help India in its quest to broaden its energy mix.
Shale gas imports from the US are expected to be a cost-effective fuel source for fertilizer and power producers who are not able to operate at full capacity for want of clean fuel from domestic sources.
Shale gas imports will be from the two blocks in which India’s state-owned GAIL (India) Ltd recently acquired—Eagle Ford and Dominion Cove—and once the imports start, will bring in six million tonnes a year, the person cited above said.
India had been in talks with the US for the imports of shale gas, but was hampered by a US stipulation that limited US shale exports to countries with which it had a free trade agreement (FTA).
In 2013, the US department of energy authorized Freeport LNG Expansion, LP and FLNG Liquefaction, LLC (Freeport) to export domestically produced liquefied natural gas to non-FTA countries from the Freeport Terminal in Texas.
According to people familiar with the situation, the very low price of shale gas in the North American market will ensure that the landed cost of the fuel, despite freight and re-gasification costs, would not exceed $6 per million metric British thermal unit. Shale is a fine-grained sedimentary rock containing an organic material called kerogen, which, when distilled, can produce oil and gas.
India is also in talks with Japan for hiring very large container carriers (VLCC) for the transport of large volumes of gas as it looks at diversifying its energy mix. This is in addition to the three VLCCs that India is to make in its Cochin Shipyard Ltd, the person cited above said.
India has long-term gas supply contracts with Australia and Russia and is looking at prospects for cooperation with African countries such as Mozambique, said the person, who was speaking ahead of the fourth India-Africa Hydrocarbon Conference scheduled to be hosted by New Delhi on Thursday and Friday.
The conference comes just months after India hosted the third India-Africa Summit in October which was attended by 41 heads of state and government from African countries. India at present imports 76% of its crude oil requirements and almost 36% of its gas requirements, and imports of oil and gas from Africa constitute 7.6% of these numbers, according to Indian government figures.
On the lifting of sanctions on Iran and payments for oil imports from the Islamic republic, the person said the Reserve Bank of India and the finance ministry would be working out how to pay off the $6.5-$7 billion in dues that India owes Iran.
India and Iran had agreed that payments would be made partly in rupees and partly in euros after the US imposed sanctions on banks and financial institutions through which payments for oil were made.
The sanctions were aimed at crippling oil exports, Tehran’s main source of foreign exchange, in a bid to stop Iran’s suspect nuclear programme. The US and other Western countries and Iran reached an agreement in July on its nuclear programme, clearing the way for the lifting of sanctions on 16 January.
