High LNG Price an Issue for India

India is in talks to buy as much as 20 million tonnes a year of LNG but price of over $10 remains a challenge, Oil Minister M Veerappa Moily said.

“A lot of capacities are being created in India and huge numbers of supply deals have been there. LNG re-gasification capacity expected to be more than 50 million tonnes per annum by 2016-17 with a supply of 198 million standard cubic meters per day,”  Press Trust of India quoted the minister as saying.

The nation currently has three operational LNG import facilities – 10 million tonne terminal at Dahej and 3.6 million tonne plant at Hazira in Gujarat and 5 million tonne terminal at Dabhol in Maharashtra. A 5 million tonne capacity terminal is to be commissioned in Kochi in Kerala this year.

LNG terminals are being planned on the east coast as well. “India already has secured supply deal of around 14 million tonnes per annum (of LNG) and around 20 million tonnes deals are in the pipeline. But challenge before us is that landed cost is expected to remain high in the lower range of $10-12 per million British thermal unit, not in the range of $4-5 which customers are used to,” Moily said.

Importers now desire to move away from oil-linked gas prices to henry hub gas pricing on account of high price band in which oil is hovering around, he said.