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India seeks more liquid shale gas from US

Energy-hungry India has asked the US to export more liquid shale gas to help bridge its yawning gap between supply and demand.

New Delhi: Energy-hungry India has asked the US to export more liquid shale gas to help bridge its yawning gap between supply and demand.

Gas-surplus US at present allows exports of small amounts of natural gas. It has so far allowed only Cheniere Energy to export liquefied natural gas (LNG) from Sabine Pass LNG terminal to countries that have not signed free-trade agreements with the US such as India.

In a pioneering effort, state-owned gas utility GAIL India recently signed an agreement to import 3.5 million tons a year of LNG from Lousiana-based Sabine Pass Liquefaction LLC, a subsidiary of Cheniere Energy.

But with India's energy needs galloping, GAIL Chairman and Managing Director B C Tripathi wants to tap all of the seven LNG export terminals planned in US and has written Oil Ministry as well as Ministry of External Affairs (MEA) to push Washington to allow other terminals to sell gas to India.

On his prod, MEA took up the matter with US. "We have taken up the matter with the US, requesting approval of shale gas/LNG export from all LNG exporter terminals in the US," Foreign Secretary Ranjan Mathai wrote to Oil Secretary G C Chaturvedi on June 2.

Tripathi had in his letter pointed that the seven planned LNG terminals only to nations that have signed free-trade agreements (FTAs) with the US.

"This implies that GAIL as a representative company of India, cannot conclude any contractual arrangement with these seven LNG export terminal companies till the time non-FTA approval is given to them," he wrote. "This is coming in way of GAIL's efforts to finalise liquid shale gas export from USA to India whereas time is very ripe now to strike LNG deals at competitive prices".

Development of shale gas -- natural gas formed from being trapped within shale formations -- in the US has turned the gas market there from shortage to glut.

The US Energy Information Administration estimates that China holds the world's largest shale gas reserves, with 1,275 trillion cubic feet, followed by the United States at 862 trillion cubic feet.

GAIL Chairman said its September 2011 acquisition of 20 percent stake in Eagle Shale Assets in Texas of Carrizo Oil and Gas, has "provided it with an opportunity to understand the North American gas market".

This led to GAIL sewing up the LNG supply deal with Sbaine Pass at a price linked to US Henry Hub gas price as against the practice of tying it up with oil.

Tripathi said LNG imports from US was largely dependent on approvals from the Department of Energy, Federal Energy Regulation Commission and clearances from various departments of US pertaining to land, water, air etc.

While FERC's approval was related to construction and conformance to the regulations, approval of DOE pertains to export of LNG to countries which signed FTA with US and/or nations which have not signed FTA with US but are not covered under any sanctions for trade relations.

As on date, only Sabine Pass has received approval for export to both FTA/non-FTA countries whereas seven export terminals have received only FTA approvals.

"We are given to understand that approval from DOE of USA is largely a policy decision with active involvement of the US government. It is, therefore, essential that Government of India immediately takes up with the counterparts in USA and impresses upon them for treating India as a special nation by keeping us outside the purview of FTA/non-FTA framework," he wrote.