New Delhi, May 11 (UNI) With consumption level of natural gas increasing at a faster pace than its production in the country, the industry has said it is opportune time to cements diplomatic ties with gas producing nations to ensure adequate gas supplies in the future.
The country's natural gas requirement is likely to be about 120 BCM by 2015, but domestic gas production is unlikely to accelerate at substantial speed to meet the demand, which will push the country for larger imports, the industry body Assocham said.
''Thus it is suggested that India further tightens its diplomatic ties with gas producing nations to ensure that adequate gas supplies are hedged even with higher prices,'' the chamber said.
The chamber suggested to develop ties now, as in the next seven years most of the Asian gas guzzlers will expire their contract with the gas producing country.
''It would be opportune time now for India that it cements its diplomatic ties with gas producing countries whose gas supply contracts with countries like Japan and Korea, holding almost 45 per cent of long term contracts, are coming to an end in 2015 for fresh renewable,'' Assocham President Venugopal N Dhoot said.
The price suggested by the chamber for securing long-term gas contracts should be between 12-14 dollars per mmBtu, up from the current spot gas price of 10-11 dollars per mmBtu.
It is estimated that country's LNG import will rise around 70 BCM by 2015.
The consumption of natural gas grew at CAGR of 7.8 per cent in the period 1997-2007, supported by rise in availability though domestic and imported sources of gas.
Natural gas accounts for eight per cent of current energy consumption. The domestic production is expected to grow 40 BCM in 2010 to 55 BCM by 2015, with a gap of 65 BCM to be met though imports.
Industry body said resource-short countries Like Japan and Korea have traditionally relied on long term LNG contracts to meet its domestic requirements and collectively accounts for 80 per cent of LNG import in the region.
The Assocham research found that a significant numbers of Japanese and Korean long tern LNG contracts will expire soon, about 45 per cent by 2015.
The chamber said both the countries will be aggressively try to renew expiring contrasts, even at a higher prices to secure energy supplies.
''Even if India succeeds in hedging a gas contracts now at a recommended price of over 12-14 dollar per mmBtu, it would not loose much,'' Mr Dhoot said.
UNI MP BJR HT1405