The report says India’s natural gas consumption is set to rise from 32 billion cubic metres (Bcm) in 2005 to 82 Bcm in 2025, supported by robust economic growth and an expanding population.
ABARE executive director Phillip Glyde explained “This could create opportunities for gas exporters such as Australia. Australia has the potential to significantly expand its liquefied natural gas (LNG) exports over the period to 2025, with a number of projects under construction and planned.”?
He said that realising this potential expansion in India’s gas use will depend on several issues, including gas availability, further development of the gas pipeline network, and implementation of gas and end-user market reforms.
“In particular, continued deregulation of the domestic gas market, the transition toward market based gas pricing and encouraging further private participation in the gas market will be important,’ Mr Glyde said.
The ABARE report noted that India has three options to meet the anticipated growth in natural gas demand over the period to 2025 “” increase domestic gas production, increase LNG imports, and import natural gas via pipeline. “LNG is the most likely form of gas imports for India in this timeframe,”? said Mr Glyde.
“The requirement for additional gas supplies will pose a challenge for India in the coming years. Given the tight supply-demand balance expected for LNG over the medium term, India is likely to face competition from established and new buyers for LNG cargoes,’ concluded Mr Glyde.
Evidence of the reports findings can be seen with the draft agreement between ExxonMobil and Indian gas importer Petronet LNG to buy 2.5 million tonnes (MMt) of LNG from the Gorgon LNG Project, for a period of 25 years. If the deal is successful the supply of gas from Gorgon is expected to begin from the end of 2012.
In addition, Petronet has reportedly been in discussion with Chevron to purchase LNG from its share of gas from Gorgon.
Other Asian countries can be seen to be in competition for LNG exports from Australia, as noted in the report. For example, Chevron has previous agreements to sell 90 per cent of its share of LNG from the Gorgon project with Japanese and Korean companies.
Last year, Shell Eastern LNG and PetroChina International concluded a binding Heads of Agreement for the long-term supply of LNG from Gorgon. During the 20-year contract term, Shell will sell 1 MMt/a of LNG to PetroChina.
PTT Exploration and Production (PTTEP) has entered into a joint agreement with Finder Exploration to acquire a 20 per cent interest in the AC/P36 permit in the Browse Basin, offshore northwestern Australia.
The North West Shelf Venture (NWSV) has executed a Sales and Purchase Agreement (SPA) with Japan’s Tohoku Electric Power Company. The SPA follows the signing of a binding Heads of Agreement last year, which stipulated that NWSV would increase the supply of LNG sales to Tohoku by approximately 0.5 MMt/a starting in 2010 for eight years. The new SPA has again increased the amount of LNG to be supplied to Tohoku to approximately 1 MMt/a from 2010.
And as previously noted in Gas Today, Woodside has signed an agreement for the potential sale of LNG from the Browse LNG Development to CPC Corporation Taiwan, for 2 to 3 MM t/a over a period of 15 to 20 years. Should the agreement proceed as planned the supply from Browse is planned to commence during 2013 to 2015.