NEW DELHI Jan 29 High prices have hit Indian
demand for liquefied natural gas (LNG) so hard that GAIL
, the country's biggest pipeline operator, is running
its plant at a fraction of its capacity, Chairman B.C. Tripathi
said on Wednesday.
Asian LNG prices LNG-AS linked to oil are about four times
the cost of natural gas in the United States, where a
boom in shale oil and gas has sharply reduced prices.
India, Japan and other Asian countries that together import
70 percent of the world's LNG met in December to discuss forming
a buyers' club to get a better deal from suppliers.
Japan's Chubu Electric Power Co has said it is
close to signing a preliminary deal with GAIL to buy LNG
together and Tripathi said on Wednesday it would be "about
sourcing, swapping, trading and supply."
Tripathi said GAIL was operating its LNG plant at 0.8
million tonnes a year (mtpa) capacity compared with an estimated
GAIL along with power firm NTPC, operate the
western India-based plant, known as the Dabhol LNG terminal.
"Dabhol can operate at 3.5 million tonnes (a year). But the
question is you should have so much of demand in the country and
capacity to absorb at that price. LNG prices are very high in
the market," Tripathi said.
India currently imports LNG from the spot market at about
$17-$18 per million British thermal units. "There is no appetite
at those prices," he added.
Softening demand for LNG along with declining local gas
output has resulted in some pipeline projects getting delayed
while a few others are operating at less than 10 percent of
capacity, Tripathi said.
GAIL has a deal to buy 3.5 mtpa of LNG for 20 years from
U.S.-based Cheniere Energy from 2017 and has booked
capacity to export another 2.3 mtpa at U.S.-based Dominion
Energy's Cove Point liquefaction plant from 2017.
GAIL is keen to swap 2 million tonnes of LNG from these U.S.
deals with those available in other regions to cut
transportation costs for supplies to India, Tripathi said.
(Editing by Jo Winterbottom and David Evans)