U.S. grants conditional authorization for shale gas export to India

The US Department of Energy (DoE) has given conditional authorization to Freeport Terminal in Texas for the export of domestically-produced Liquefied Natural Gas (LNG) of US to countries that do not have a Free Trade Agreement (FTA) with it. Given that the companies from countries such as China, Japan and Britain have already an overwhelming stake in this Texas company, the authorization, though not immediately but from 2017-18, will benefit India to outsource its energy needs.  The Freeport facility in Texas has been 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.

Indian perspective:

India has been pushing for US export of shale gas to India. The current decision holds significance as present demand-supply gap of natural gas in India stands at around 2.2 trillion cubic feet (tcf) per annum and is likely to go up to nearly 4 tcf per annum by 2016-17. The demand of natural gas is expected to be about 8 tcf per annum by the year 2030. To meet this demand Indian oil and gas companies are investing in overseas gas exploration and production companies. For instance, India’s Petronet LNG and United LNG, LP, have entered into a conditional deal to supply LNG from the Main Pass Energy Hub LNG project in the Gulf of Mexico, with the final agreement expected to be concluded by year-end.

Besides, other Indian companies, including Reliance Industries in the private sector, had acquired stakes in oil and gas exploration and production companies, a trend which would receive a huge boost if export of natural gas is allowed to India. As per estimates, roughly 20% of the $133.7 billion invested in U.S. tight oil and shale gas from 2008 to 2012 has come from abroad, with Indian companies accounting for a total investment of nearly $4 billion so far.

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Categories: International Current Affairs 2017

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