Asian Flu Diverts Lng Majors To India

The international liquefied natural gas (LNG) business is focusing on India with short-term deals in Asia drying up due to lack of Japanese and South Korean buying. The Asian currency crisis may turn out to be the best thing ever happened to Indian LNG sector.

With Thailand pulling out of its plans to build an LNG terminal, India has emerged a front-runner. LNG terminal builders and gas suppliers are striking deals at a frenetic pace.

Reports indicate that possible buyers of LNG like China and Pakistan are not far along as India in terms of government approvals and consortium building. Indias desperate need for electricity and demand from West Asian countries to monetise their stranded gas is expected to accelerate LNG plans in India.

Until a few months ago, most LNG marketers were more focused on South Korea, Japan, Taiwan or Thailand as an outlet, only paying secondary attention to India.

Sensing an opportunity to close the gap with its competitors, Yemen LNG, long considered dubious in terms of project economics, has been particularly aggressive in India, flaunting its highly developed upstream assets as an enticement for a fairly rapid build-up toward commissioning.

Given this small window of opportunity in India, Total and partners Exxon and Hunt also seem to have worked out internal differences which had them marketing LNG independently.

The most enticing aspect of the Indian gas market to aspiring LNG producers is its lack of historical relationships. This has served to level the playing field.

Projects once thought to be on the back burner, including Yemen LNG, Tannguh LNG, and the Undan-Bayu-based project, are getting equal time in their battle with Indonesian, Malaysian, and West Asian suppliers.

Like, an LNG marketer says, We cannot compete using our historical relationship. We do not have one. But we can compete on price, and in India, price is everything.

Several LNG marketers, such as Shell, Mobil, and Enron are also attempting to set up gas-fired power operations in India in order to improve the economics of the LNG sale.

Others such as Gaz de France and Britains BG, are investing in wholesale ventures or advance studies for LNG terminals.

However, industry sources point out that selling LNG to India is not likely to be smooth sailing for suppliers. India has major infrastructure shortages in terms of gas transmission and distribution lines, and liberalisation of gas and electricity prices is still unresolved.