New Delhi: Government should consider entering into long-term contracts for imports of gas even at a higher price of $12-14 as against the prevailing rate of $10-11 per million metric British Thermal Unit (MMBTU), said industry chamber Assocham.
Expressing concern over the scarcity of gas in the country, it said government should tighten diplomatic ties with gas producing nations to meet the rising demand, which is likely to swell by over 120 billion cubic meters (BCM) by 2015.
Currently, the spot gas price at which India is buying is on an average $10-11 per MMBtu, the chamber said adding that India would have to resort to larger imports for natural gas since the domestic gas production is unlikely to accelerate at substantial speed, Assocham said.
By 2015, most of gas producing countries would have expired their supplies contracts with Asian countries, Assocham said in a note to the Ministry of Petroleum and Natural Gas.
Country’s domestic gas requirement currently stands at 35 BCM, most of which is met through indigenous production and in next seven years, the requirement is going to increase by about 85 BCM, it said.
“It will be opportune time now for India that it cements its diplomatic ties with gas producing countries whose gas supply contracts with countries like Japan and Korea, holding almost 45% of long term contracts, are coming to an end in 2015 for fresh renewable,” Assocham president Venugopal Dhoot said.
Even if India succeeds in hedging a gas contracts now at a recommended price of over $12-14 per MMBtu, it would not loose much, Dhoot said.