While the world concentrated on the public spat between India and America that eventually scuppered a new global trade agreement in Geneva last week, the two sides were engaged in a meaningful dialogue to hammer out arrangements that will allow shale gas exports from the US.
Indian officials would like to finalise a deal that Prime Minister Narendra Modi and President Barrack Obama can sign in Washington during a visit scheduled in September.
The deal would involve an India-specific general waiver to laws which currently restrict US sales of oil and gas only to countries with which it has free trade agreements.
The issue was taken forward and the architecture for the deal was discussed at the fifth India-US Strategic Dialogue, a first cabinet level meeting between the new Indian government and the US administration.
US commerce secretary Penny Pritzker and deputy secretary of energy Daniel Poneman were engaged in talks with Indian officials on this issue.
The US has already given a special waiver to India’s state-run gas pipeline giant GAIL to buy shale gas from America.
The GAIL deal will see the company importing 3.5 million tonnes per annum (mtpa) of gas for 20 years, starting 2017-18, from Sabine Pass LNG.
As part of the build-up to the move, the US India Political Action Committee (USINPAC) hosted a packed legislative briefing at Capitol Hill last week when secretary of state John Kerry was holding meetings in India.
US Congress will soon be voting on bills that will in effect allow shale gas exports to India.
Rahul Srinivasan, USINPAC director (LNG initiative) said: “The focus of our grassroots campaign has been to support two House bills (H.R.6, H.R. 2771) and a Senate companion bill (S. 2494). If passed, the bills are intended to change current law and enable US exports to India.” Several members of the House Energy & Commerce Committee and co-sponsors of the House Bills addressed the USINPAC-organised legislative briefing. Republican Congressman and influential member of the House Committee, Ted Poe told the meeting: “Like the Blue Bell ice cream company, our motto on LNG should be: We eat all we can, and we sell the rest. Where should we sell it? India.”
A McKinsey study says North American gas developers are keen to export their shale gas finds to markets willing to give a higher price. By the end of 2013, the US department of energy had applications for building LNG export terminals with a potential of 288 million tonnes.
If even one-third of this capacity were built, it would have a significant impact on global LNG prices, threatening the viability of higher cost capacity additions in countries such as Australia and Russia.
With China working furiously to develop its own untapped huge reserves of shale gas, the US companies see India as the most viable energy market in the long run.
The US is also working on a long-term strategic and economic partnership with India.
The US Energy Information Administration estimates that China has 1,115 trillion cubic feet of recoverable shale gas. This is the largest in the world. In contrast, India is believed to have reserves estimated between 32 trillion cubic feet and 63 trillion cubic feet. India is believed to have more coal bed methane than shale gas.