News

Pradhan talks Texas energy bridge as India to get 1st US gas cargo on Friday

NEW DELHI: India will get its first shipment of US gas next week on Friday at Dabhol in Maharashtra, oil minister Dharmendra Pradhan said on Wednesday, underlining the backdrop of his talks with visiting Texas Governor Greg Abbott on building an 'energy bridge' with the hub of American oil and gas industry.

The two leaders discussed the prospects of widening the ambit of oil and gas co-operation with Texas, with Abbott saying he expected to send more gas shipments to fuel India’s “prolific economy” since his state is “blessed with huge amount” of fossil fuel resources and creating more facilities for exporting them.

Pradhan said the long-term US gas sourcing deal, entered by state-run gas utility GAIL, will broaden the hydrocarbon engagement between India and the US, particularly Texas. “There is much more we have to gain, through further investments, technological tie-ups and cooperation between universities.”

He said India is poised to emerge as a huge energy market very soon. “Today, fertiliser is the primary consumer, power sector is second. I can visualise a big new consumer base in the steel sector.”

Indian state-run refiners imported US crude, bought in the spot market from trading houses, for the first time in October last year. The companies have imported several cargoes since then. The gas shipment under GAIL’s 20-year contract, signed in 2011 when the US was far from being seen as a swing-maker in global oil market, truly marks a new energy route for India. It also provides a leverage against the country’s long-standing dependence on West Asian suppliers.

GAIL’s term contracts with Sabine Pass and Dominion Cove Point projects make the company one of the largest holders of liquid gas portfolio linked to Henry Hub -- the US gas price benchmark -- and will allow it to market 6 million tonne of US gas. The company will use US gas to replace spot cargos it buys to meet market demand. It has entered into time-swap deal for a million tonne of US gas for 2018-19 in an attempt to recast its supply portfolio in line with domestic demand.

GAIL had also become the second Indian entity after Reliance Industries Ltd to have invested in the US shale industry, buying a 20% stake in Eagle Ford Shale of Carrizo Oil & Gas. Both Cheniere and Dominion projects have the US government’s approval to export gas to countries like India that do not have free trade agreement with Washington.