Indian biggies bid for US LNG hubs

Discussion in 'Economy & Infrastructure' started by Oracle, Aug 27, 2012.

  1. Oracle

    Oracle New Member

    Joined:
    Mar 31, 2010
    Messages:
    8,120
    Likes Received:
    1,541
    Location:
    Bangalore, India
    MUMBAI: Reliance Industries (RIL), Oil and Natural Gas Corporation (ONGC) and GAIL want to buy shares in liquefied natural gas (LNG) terminals on the east coast of the United States for shipping gas to India at about $9.5 per million metric British thermal unit (mmBtu), which will be over 50% cheaper than current imports.

    Massive shale gas discoveries have made US gas-surplus, with work on converting LNG complexes from regasification to liquefaction (import to export) terminals underway. Liquefaction makes it easier to store and transport gas where pipelines are not available.

    "Indian companies with shale gas assets are interested in acquiring an operating interest in terminals to ship gas to India at less than $10," said a banker directly involved with the discussions, adding one such deal could by finalized before year-end. India is already the world's eighth-largest importer of LNG. Those imports could rise five-fold in the next decade as domestic gas output falls and demand surges.


    Currently, seven LNG terminals are planned in the US to export gas. Indian companies want to ship from the US east coast just as Chinese counterparts focus on the west coast for shipment to ensure energy security.

    This is significant as shipments from US could become more viable than gas flowing through the Trans-Afghanistan-Pakistan-India (TAPI) pipeline from Turkmenistan in the future. The landing cost of this is estimated at $13 per mmBtu, besides the geopolitical risks.

    RIL has made $3.8 billion investments in US shale exploration and production assets, and is now exploring opportunities to buy stakes in LNG terminals on the east coast to ship the gas to India. "RIL plans to invest another $1-1.5 billion over five years. Shale gas is expected to constitute $1-1.25 billion of EBITDA once the total investment is completed," said an RIL spokesperson.

    GAIL India last year bought a 20% stake in one of Carrizo Oil & Gas's shale gas assets for $300 million. The gas transporter is planning to buy a stake in an LNG export terminal and has been in talks with Macquarie Energy, which has a share in the US-based Freeport LNG project. "India needs gas, so equity participation in LNG projects is also required," said GAIL marketing director Prabhat Singh.

    ONGC chairman Sudhir Vasudeva confirmed that the state-owned giant was pursuing a stake buy in LNG terminals in the US. This month, ONGC and Japan's Mitsui agreed to work together in the gas and LNG businesses. "We have signed an MoU to pursue opportunities in the entire value chain of sourcing LNG to setting up a re-gasification terminal," Vasudeva said, adding that under the agreement both partners would make efforts to source LNG from international suppliers on spot, short- and long-term contract basis.

    The seven planned LNG terminals will allow exports to nations that have signed free-trade agreements (FTAs) with the US. With India not on this list, GAIL India chairman B C Tripathi has sought diplomatic intervention to push Washington to allow these terminals to sell gas to India. Union minister of state for petroleum R P N Singh said in Parliament that the external affairs ministry has been asked to intervene for allowing gas imports from US.

    One of the bankers helping Indian companies buy stakes in terminals said he expected further clarity on US gas exports in the next 18 months, by when the revamped LNG terminals would be ready.

    The gas shipments from US will be costlier than current domestic gas prices at $4.2 per mmBtu, which is subject to revision in 2014. RIL, for instance, is seeking price approval from the government to sell its coal bed methane gas at $12 per mmBtu.

    TOI
     
  2.  
  3. Oracle

    Oracle New Member

    Joined:
    Mar 31, 2010
    Messages:
    8,120
    Likes Received:
    1,541
    Location:
    Bangalore, India
    We do not have a free trade agreement with US? :facepalm:

    In terms of economic reforms, India is in the medieval age.
     
  4. Rahul92

    Rahul92 Senior Member Senior Member

    Joined:
    Sep 4, 2010
    Messages:
    1,622
    Likes Received:
    748
    You know what will happen if we have free trade agreement
     
  5. Oracle

    Oracle New Member

    Joined:
    Mar 31, 2010
    Messages:
    8,120
    Likes Received:
    1,541
    Location:
    Bangalore, India
    There will be more opportunities for people and business for both countries. Visa would be relaxed to an extent. There are many benefits.
     
  6. Jim Street

    Jim Street Regular Member

    Joined:
    Aug 20, 2012
    Messages:
    279
    Likes Received:
    126
    I rather say political paralysis for lack of economic reforms. All necessary actions needed are there but the politics comes in between.

    Look at Indian Railways under Lalu Prasad Yadav, was he the brain behind it, nope but the existing policies which he simply gave go ahead. Same is the case of Gujrat, the policies were always there, intellectuals with brilliant schemes were there, Modi just gave a go ahead.

    India's possible economic reforms that can change our growth rate and every part of the economy are there but all it needs is permission from govt.
     
  7. Oracle

    Oracle New Member

    Joined:
    Mar 31, 2010
    Messages:
    8,120
    Likes Received:
    1,541
    Location:
    Bangalore, India
    Exactly my point. If we do a better analysis, we will see that it's mostly the fault of allies and the opposition parties. Everybody wants to score ball with the political party in power. No one thinks about the betterment of this country.
     
  8. Rahul92

    Rahul92 Senior Member Senior Member

    Joined:
    Sep 4, 2010
    Messages:
    1,622
    Likes Received:
    748
    Dude India will eventually become a dump yard I am not against economic reforms but they should serve people in a way such that neither the economy nor the country suffer
     
  9. Oracle

    Oracle New Member

    Joined:
    Mar 31, 2010
    Messages:
    8,120
    Likes Received:
    1,541
    Location:
    Bangalore, India
    FTA will not make India a dumpyard. Things which we don't produce, we have to buy from other countries. As far as dumping is concerned, China is already doing that to India by flooding the market with cheap, low quality goods. But people do buy it, right? What we need is a sound manufacturing policy on the levels of SEZs.
     
  10. ant80

    ant80 Regular Member

    Joined:
    Jul 10, 2009
    Messages:
    141
    Likes Received:
    22
    Forget about SEZs. Just fix the labor laws.

    There is a law stating that any company with over 100 workers must seek approval of parliment before firing workers. Stupid law catering to the left. Laws like these need to go. Forget about SEZs. Just fix the labor laws.
     
  11. SADAKHUSH

    SADAKHUSH Senior Member Senior Member

    Joined:
    Sep 7, 2010
    Messages:
    1,802
    Likes Received:
    758
    Location:
    Winterland
    It depends whether one has a preconceived ideas of negative results or one who is open minded enough to study the impact of free trade agreement e.g. between USA, Canada and Mexico. Before the agreement was signed we had our share of "What Will happen" scenario as well.After over more than two decades of it being in force skeptics have been silenced.

    I look at the benefits from the consumer point of view. We have one of the lowest inflation rate, lowest interest rate and pushes individuals to innovate in the manufacturing and service industry which ultimately benefits the country as a whole.

    The forces of skeptics should be pushed aside and crushed once for all otherwise we will be left behind in the economic terms.
     
    ani82v likes this.
  12. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

    Joined:
    Sep 28, 2011
    Messages:
    14,140
    Likes Received:
    8,528
    Location:
    North Carolina, USA

Share This Page