India may not Get US Shale Gas

Published: 25th September 2014 05:59 AM  |   Last Updated: 25th September 2014 05:59 AM   |  A+A-

NEW DELHI: Even as the forthcoming meeting between Prime Minister Narendra Modi and US President Barack Obama next week will put the spotlight on renewable energy, India’s wish list for a relatively clean source of energy--LNG imports from US’s shale gas reserves-- is unlikely to be realised.

Sources indicated that the joint declaration, which is still being negotiated, will have a clear leaning towards new and renewable energy in line with the Prime Minister’s priority for clean energy.  While shale gas will find a mention in the document, it will not give an explicit guarantee about the US’ LNG supplies. Rather, it will talk about providing US technical help in exploiting India’s own shale gas resources.

Ever since the US became a net exporter of energy, India has been looking to tie-up some supplies. The biggest bottleneck has been American domestic law that does not allow exports to countries with whom Washington has not signed a free trade agreement(FTA).

So far, GAIL has got project-specific waiver for two deals to buy 3.5 million tonnes per annum (mtpa) of LNG Cheniere Energy and another 2.3 mtpa at Dominion Energy’s Cove Point liquefaction plant.

New Delhi has been asking for a general waiver for all Indian companies, before the legislation is approved to remove the FTA barrier. But, the crisis in Ukraine has led to a refocus in attention for the US, with many advocating LNG supply to Kiev since its dependence on Russian energy supply straitjacketed its options.

However, the White House has not yet gone to the extent of providing a waiver, even though several members of the US Congress continue to lobby for opening up to non-free trade agreement markets. At the same time, there is a strong group advocating against sending surplus gas abroad, as it will raise the low domestic gas rates.

The Indian government had been keen to advocate LNG since early 2013, which led to Indian-American political advocacy group, USINPAC starting an LNG initiative to convince the lawmakers to support LNG exports by passing two House Bills and one Senate Companion Bill. If those three draft legislation were to be passed, then the US can sell LNG to members of World Trade Organisation like India.


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