India is exploring buying more liquefied natural gas from Australia under long-term sales agreements to take advantage of cheap energy.
“Opportunities to control the entire value chain right from gas production, liquefaction, shipping, re-gasification and power generation can be evaluated at the current historic low prices of many of these activities,” India’s Power Minister Piyush Goyal said in a statement. Goyal is visiting Brisbane for an India-Australia energy security meeting. Australia signed its first long-term LNG sales agreement with India in 2009.
A 75% drop in LNG prices since 2014 because of a global glut is helping India’s quest for cheaper energy supplies from overseas. Prime Minister Narendra Modi is targeting to expand the country’s renewable power capacity fivefold to 175 gigawatts in seven years along with restarting stranded gas-based plants with subsidised fuel.
Australia and India will prepare a road map within two months outlining the possibility of supplying LNG to India at prices that compete with coal to produce electricity, according to Monday’s statement. Coal-based electricity is available in India at less than 5 cents per unit, Goyal said in the statement.
Australia, forecast to overtake Qatar as the world’s largest supplier of super-cooled gas by 2020, is boosting its exports which will add to the global glut. The global market will be oversupplied by 14mn to 21mn metric tonnes a year in 2018 to 2021, according to Credit Suisse Group.
India’s Petronet LNG, the nation’s biggest gas importer, has renegotiated a long-term supply contract with Qatar’s RasGas Co, which led to reduction in the price of the gas by almost half starting January 1.