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India in talks to buy 20 million tonnes of LNG: Veerappa Moily

NEW DELHI: Energy-hungry India is in talks to buy as much as 20 million tonnes a year of liquefied natural gas or LNG but price of over $ 10 remains a challenge, Oil Minister MVeerappa Moily said today. 

"India has now become fifth largest importer of LNG after 
Japan, South Korea, UK andSpain and accounts for 5.5 per cent of the total trade," he said addressing third IEF NOC-IOC Forum. 

With LNG demand expected to grow at 5-6 per cent per year till 2020 and 2-3 per cent thereafter, India along with other Asian counterparts is driving this growth, he said. 

"A lot of capacities are being created in India and huge numbers of supply deals have been there. LNG re-gasification capacity expected to be more than 50 million tonnes per annum by 2016-17 with a supply of 198 million standard cubic meters per day," he said. 

The nation currently has three operational LNG import facilities - 10 million tonne terminal at Dahej and 3.6 million tonne plant at Hazira in Gujarat and 5 million tonne terminal at Dabhol in Maharashtra. A 5 million tonne capacity terminal is to be commissioned in Kochi in Kerala this year. LNG terminals are being planned on the east coast as well. 

"India already has secured supply deal of around 14 million tonnes per annum (of LNG) and around 20 million tonnes deals are in the pipeline. But challenge before us is that landed cost is expected to remain high in the lower range of $ 10-12 per million British thermal unit, not in the range of $ 4-5 which customers are used to," he said. 

"Making this LNG a cheaper comparable fuel option is a great task," he added. 

Moily said pricing of LNG (natural gas super-cooled to turn it into liquid for ease of transportation in ships) is fast turning an issue. 

"Importers now desire to move away from oil-linked gas prices to henry hub gas pricing on account of high price band in which oil is hovering around," he said. 

Stating that the country depends on imports to meet 73 per cent of its oil needs, the Minister said he wants to reduce imports by 50 per cent by 2020, 75 per cent by 2025 and eventually achieve self-sufficiency and 
energy independence by 2030. 

Part of this will be done by finding more oil and gas. Despite very low per capita consumption of energy, which is about one-third of global average, India is the fourth- largest consumer of energy in the world and expected to become third largest consumer of energy by 2030, he said. 

India's energy consumption will grow at around 7.2 per cent during 2007-2030 in comparison to world average of 1.5 per cent, he said. 

As per IEA projections, India will be needing additional 271 million tonnes of oil and 97 million tonnes of oil equivalent gas per annum by 2030.