GAIL sees India gas mkt deregulated by 08/09

Amsterdam, Jun 8: State-run gas transporter GAIL expects the country's gas market to be deregulated by 2008 or 2009 and prices to be free of government control.

Proshanto Banerjee, managing director of GAIL, told a news conference at the World Gas Conference in Amsterdam on Thursday that recent gas price increases could encourage domestic production.

''I believe that by 2008, 2009 you may see a market with totally free pricing arrangements. But this my personal view, this is not the view of the government -- I'm trying to read the crystal ball,'' Banerjee said.

Asia's third largest economy has done much in the past five years to open its energy market, loosen regulation and create incentives for foreign investors, which is going to continue and put the country in a competitive position to China, he said.

''There is a huge interest by multinationals to enter partnerships with national companies ... It won't be very long before we equal or even surpass the system in China,'' Banerjee said.

Natural gas now accounts for 8 percent a year of the energy needs of Asia's third-largest economy and is expected to rise to 25 percent in the next 20 years, he said.

India's gas needs would be covered mainly by domestic production, liquefied natural gas imports and transnational pipeline supplies.

GAIL sees a sharp increase in LNG demand in India and plans to increase its terminal capacity on the west coast of the country to 40 million tonnes in the coming years, Banerjee said.

The company expects to import 8 to 10 spot LNG cargoes from April 2006 to March 2007, with a capacity of 63,000 tonnes each and was talking to potential suppliers in Africa, Middle East and South-East Asia.

''The responses has been very positive so far and I believe that we can have those cargoes,'' he said, declining to give details about prices.

GAIL sees Japan and Korea as India's main competitors in attracting LNG imports after China has shifted its focus more onto transitional pipelines and coal-based energy supplies.

Banerjee said his company was seeking to expand its gas exploration and production activities in Uzbekistan as well as 2-3 African countries. GAIL also expects to expand its domestic gas grid in the next 4-5 years to reach most parts of the country.

REUTERS