Business Standard
Saturday, Nov 21, 2009
 
drived banner
drived banner
  Advanced Search
Feedback | RSS
Content Guide
Follow us on  
  Home  |Markets & Investing|Companies & Industry|Banking & Finance|Economy & Policy|Opinion|Life & Leisure|Mgmt & Mktg|Tech World|BS Products 
 Section Home | News Now | Today's Paper | Features & Analysis | Politics & Public Affairs | Q&A | Columnists | BS Says
Home > Economy & Policy Live Markets | Smart Portfolios II
  Search:
Crisis looms as global gas supplies dry up
Rakteem Katakey / New Delhi July 7, 2008, 0:24 IST
India faces a new energy crisis — unavailability of gas in the international market — that could worsen power supplies and impact a wide range of industries.
 
Indian companies have been importing liquefied natural gas (LNG) because domestic demand exceeds supply. A third of these imports are secured in the spot market and the balance through multi-year term contracts. 
 
TROUBLE IN THE AIR
Gas demand in India 180 mcmd
Gas availability in India 90 mcmd
Gas available as LNG 40% *
*of which a third is bought in the spot market
mcmd = is million cubic metres per day
 
This sourcing pattern is a problem because, as Prosad Dasgupta, managing director of Petronet LNG, India's largest importer of LNG, explained, "There is a huge shortage of spot LNG cargoes in the world market."
 
This is because most of the cargoes have been bought by Japan, which is using gas to fire its power plants after its Kashiwazaki nuclear power plant closed last year.
 
Japan has imported close to 9 million tonnes per annum (mtpa) of spot LNG over the last year — more than India's LNG re-gassification capacity of 7.5 mtpa owned by Petronet LNG and Shell Hazira.
 
Spot LNG prices have increased — they mimic oil prices — but the supply constraint is a first. Prices at the New York Merchantile Exchange have more than doubled to 13.50 per mBtu (million British thermal unit) from $5.89 per mBtu in August 2007.
 
Users of spot LNG include NTPC — the country's largest power generator. "Spot LNG purchases are becoming a problem. When they are available we are paying $22-25 per mBtu. Our plants are also facing a shortage of gas," said an NTPC spokesperson.
 
"Shortage of spot LNG also affects smaller industries such as tile- and glass-makers and small power plants," said a Delhi-based analyst. "The larger players tend to have term contracts," he added.
 
Gas producing countries liquefy gas and transport it in cryogenic ships to consuming countries that are not connected by pipelines. The liquefied gas is easier to transport but is more expensive since the buyer has to pay liquefaction and regassification costs.
 
Most industries in Gujarat, where India's LNG regassification terminals are located, are worried.
 
"We may have to increase retail prices of gas in Gujarat," said an official in Gujarat State Petroleum Corporation, which sells gas to households and vehicles.
 
Industries across the country are waiting for Reliance Industries to start producing gas from the Krishna-Godavari basin off the Andhra Pradesh coast. At peak production, gas from this field is expected to double availability in India.

 
Arrow Other Stories     
- Sensex makes remarkable recovery, regains 17K
- S C Kalia takes over as Union Bank ED
- PNB may acquire majority stake in Kazakh bank
- Maoist hindering land acquisition for Tata steel project: Raman
- Koda says he will report to ED only after Jharkhand polls
More  
  Read Business news in 
Advertisements
  Get financial advisory and solutions for your projects
  Holidays starting at a delightful EMI of Rs 3481
  Switch on and say hello to Monday morning !
  Your dream home can now be a reality.
  Visit Fortis for a preventive health check-up & get a 20% discount.
  Follow the ups and downs of your investments. Try our new Portfolio Tracker
  Kolkata Dock \ Freight contract for the British Gurkhas Nepal
  Find how Midsize Businesses use ERP to gain competitive advantage
  Trading in Forex is now as easy as 1-2-3
  Discover an economical and cost effective way to market your products and services
  Giftwithlove.com: Same day delivery of Flowers and Cakes to India
  Download the E-book on the Future of Business Intelligence
  Learn Best Practices for improving customer satisfaction
  Know your customers better... download the free e-book on CRM
   Discussion Board / User Comments    
Display Name  Email-Id  
Post your comment
karun_asia July 07 , 2008 ,18:23 IST
The oil prices are escalating & so the liquefied natural gas (LNG) .But the rationale has changed. Massive shortage of spot LNG cargoes all along with increased imports from Japan has aggravated the crisis. When Reliance starts producing gas from the Krishna-Godavari basin off the Andhra Pradesh coast,things may change but at present we may witness a steep add to in the gas prices.
Reply
umashankar July 07 , 2008 ,15:35 IST
The recent strange Govt approach to disallow 7 yrs tax holidays on natural gas in NELP-VII(continuing tax holiday on oil even when price is around US $ 140 per barrel!) has deterred companies to bid for deep water. Gas development has been strangulated by artificial pricing discouraging investors, interference by the Govt even where the contracts and policy clearly provide freedom to the contractors to sell gas at market determined prices. There are host of policy and regulatory bottlenecks.
Reply
rajarambojji July 07 , 2008 ,03:02 IST
It is a relief that Reliance facility at Krishna-Godavari basin will double current availability and we may not need imports once they start their supplies. But I do hope if there are any bureaucratic hurdles in their way, both the State and Centre will give priority and clear the same in the larger national interest. it is gratifying that private initiative had the vision and I complement the larger planning process and vision which prevailed in Government of India to have made this possible.
Reply
Most Popular
Read
E-Mailed
Commented
   
- Bharti Airtel slashes roaming rates by 60%
- Govt may allow private sector investment in education
- Network18 lays off 200 staffers
- Suzlon Energy's three promoters pledge 2.8 cr shares
- Patni may host all IT services on 'cloud'
 
 More  
BS Poll
Cast Your Vote
 
   
 
Should India's defence sector be thrown open to foreign investments?
  Yes  No
Submit

  Hot Searches  
 
Amitabh Bachchan | N Chandrasekaran | Swine Flu | Mukesh Ambani | Anil Ambani | TCS | Infosys |  Air India |  Duronto |  Pranab Mukherjee | Sonia Gandhi | Congress | Rahul Gandhi |  Bigg Boss |  New Pension Scheme |  Service tax |  Excise duty |  Sebi | Tech Mahindra |  Ramalinga Raju |  Satyam |  Reliance  |  RBI |  GDP |  Gold |  Ratan Tata |  ICICI |  |  B-School | DLF  Sensex |  Tax calculator | Home Loan  | Bollywood | Personal Finance |  inflation | oil prices |  World Bank | Reliance Infratel |  HDFC |  Barack Obama  
 
  Member Area Write to the Editor RSS Archives Advanced Search
  Subscribe to BS print product BS e-paper Newsletter Portfolio Tracker
  BS Products BS Hindi BS Motoring
FOR HOT PRODUCTS
BS Bazaar.com
Home | Markets & Investing | Companies & Industry | Banking & Finance | Economy & Policy | Opinion
Life & Leisure | Management & Marketing | Tech World
About Us | Partner With Us | Code of Conduct | Careers | Advertise with us| Terms & Conditions | Disclaimer | Site Map | Contact Us | Feedback