US shale gas exports to India should be allowed, experts claim

March 18, 2013

The United States should allow shale gas exports to India as this might prove a win-win situation for both countries, energy experts claim.

The United States should allow shale gas exports to India as this might prove a win-win situation for both countries, energy experts cited by the Business Standard have claimed. Exports might not only help meet the increased demand of India for energy supply and build on existing trade relations between the two countries but could also mark a major change in U.S. interests in the entire region.

Speaking at a Congressional hearing on Wednesday, Arvind Subramanian, senior fellow at the Peterson Institute for International Economics and a former IMF economist, said that shale gas exports to India are a great opportunity that has to be grasped. Dan Twining, a senior fellow for Asia at the German Marshall Fund of the United States, also expressed a similar view at the hearing, claiming that the move would set a solid foundation for a secure trade network in Asia Pacific.

Twining added that India and Japan should come in the focus of the United States as strategically important partners, so further strengthening of relations with those two countries would be of great benefit. In order to achieve this, the United States should provide preferential access or a more favorable agreement for U.S. energy exports, since developing the economy and military capacity of Asian partners is of interest to national security. Subramanian and Twining were answering questions from Congressman Charles Boustany from Louisiana during a hearing on India-U.S. trade relations by the Trade Subcommittee of the House Ways and Means Committee.

Congressman Boustany explained that a Louisiana-based company, Cheniere Energy, has been granted the first liquefied natural gas (LNG) export licence. The company has signed a 20-year contract with Indian energy company GAIL for the export of 3.5 million tonnes of LNG annually — a move that would create jobs and boost local industry, Boustany added.

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Subramanian pointed out that shale gas exports to India might also have a positive impact on global climate change. Currently, India's economy is heavily dependent on coal, which is considered the worst pollutant in terms of carbon emissions. Facilitating the transition to much cleaner natural gas would result in a more environmentally friendly economy, he stated.

Meanwhile, India may also look into possibilities for developing its own natural gas industry, as experts claim that the country may be sitting on huge shale gas reserves. According to estimates by the U.S. Geological Survey, approximately 1.6 trillion cubic feet of shale gas could be extracted in the provinces of Bombay, Cauvery and Krishna-Godavari. The most promising fields have been pinpointed in six areas — Cambay, Assam-Arakan, Gondawana, KG onshore, Cauvery onshore and the Indo-Gangetic Basin. According to provisional data, the Cambay area alone has an estimated 924 billion cubic feet of gas and 31 million barrels of natural gas liquids.

India still does not have the necessary hydrocarbon policy in place but this could be introduced soon, as it is reportedly reaching the final stages of drawing up legislation, hoping for the first investors to take part in the first auction by the end of 2013, Oil Price website said.