Prime Minister Narendra Modi’s persuasive skills will be put to test, when he visits the US which is to emerge as a major LNG exporter.
India is hoping that the US will agree to sell LNG to the country by exempting it from the requirement of a compulsory Free Trade Agreement (FTA) when Prime Minister Narendra Modi visits Washington DC in September.
“The issue is very much on the Prime Minister’s agenda, and we have indications that the US is seriously considering the matter,” a Government official told Business Line.
At present, the US gas is available to only those countries with which it has a Free Trade Agreement (FTA) and India does not have an FTA with the US.
Though two projects in the US, where GAIL (India) has stake, have been given special permission for future sourcing, New Delhi would prefer complete waiver from the existing conditions. India’s confidence on getting the waiver emerges from a Bill recently introduced in the US Congress for speedy approval of export of natural gas to World Trade Organisation countries.
“The introduction of the Bill on export of natural gas early March was followed by the India-US Energy dialogue in New Delhi attended by US Energy Secretary Ernest Moniz where the matter was discussed at length,” the official said.
Since the US has a lot of natural gas to export and India would prove to be a big market, officials are hopeful that a deal could be on the anvil during Modi’s proposed visit.
The Indian-American business community in the US, which has sprung into action to make Modi’s visit to the country a success, believes that a deal on LNG is a low-hanging fruit.
“The two sides need to make a big announcement during Modi’s visit to lift the bilateral relationship that has gone a little downward (in the recent past). Since the Bill that could give India a waiver and allow US to sell it LNG is already there in the Congress, we are optimistic that something on this could be announced in September,” Sanjay Puri, Chairman, US India Political Action Committee, told Business Line during a recent visit to New Delhi.
LNG imports from the US are largely dependent on approvals from the Department of Energy, Federal Energy Regulation Commission and clearances from various departments of the US. Approval of Department of Energy is crucial as it pertains to export of LNG to countries which have a free trade agreement with the US and/or nations which have not signed FTA with the US but are not covered under any sanctions for trade relations.
GAIL was the first Asian company to have signed a long-term LNG sales and purchase agreement with Cheniere Energy Partners, LP (Cheniere) to procure 3.5 million tonne per annum of LNG from the latter’s Sabine Pass Terminal in Louisiana, US for a period of 20 years.
GAIL has also signed a Terminal Service Agreement with Dominion through GAIL Global (USA) LNG LLC for booking 2.3 million tonne annually liquefaction capacity in the Cove Point LNG liquefaction terminal project located at Lusby in Maryland.
As the agreements are on Freight on Board basis, GAIL is required to make its own arrangements for transportation of LNG from these terminals. The transportation of LNG is expected to begin from mid-2017.