Mumbai: Royal Dutch Shell Plc wants India to bring natural gas under the goods and services tax (GST) to make transport of the fuel across the country more efficient.
"An element that would make transport (of natural gas) across the country more efficient is the inclusion of natural gas in the GST. We will be very supportive of that," said Ajay Shah, vice president, Shell Energy Asia. Shah spoke to Mint after the release of Shell's LNG outlook 2019 today.
Shell owns the 5 million metric tonne Hazira liquefied natural gas (LNG) terminal in Gujarat and is also present in fuel retailing.
"We see great prospects in India. We also want to be more involved in the Indian market. We think an open market is very very important. And a prerequisite to India's natural gas hub is access to a level playing field," added Shah.
Shell predicts that India and China can double their LNG import infrastructure in five years and will be the prominent drivers of natural gas demand.
“India is also using LNG to meet its increasing needs for secure energy supply. Domestic gas production dropped and the resulting increase in demand for imported gas was met by LNG (up 10%, year on year). LNG’s share of India’s total gas supply mix exceeded 50% for the first time in 2018," the Shell LNG Outlook 2019 said.
According to the outlook, China, India, South Korea and Pakistan led LNG demand growth in 2018.
Commenting on the drivers of demand in India, Steve Hill, executive vice-president, Shell Energy Asia, said, “The expansion of terminals in Dahej, Ennore, Mundra, and Hazira will be infrastructure projects that can channel this demand in the coming five years."
Hill added that with the US, Canada, Mozambique and Russia boosting their natural gas production, these countries may be sources from where this demand can be met.
The significantly large driver of LNG demand globally has been China. “Ongoing efforts to improve urban air quality saw China’s imports of LNG surge by 16 million tonnes in 2018, up by 40% from 2017," a press statement from Shell said. "We saw Asian LNG demand growth exceed expectations again in 2018 and we expect this strong growth to continue. Investment in new supply projects is picking up, but more will be needed soon."
From 2014 through 2017, LNG buyers had increasingly been looking to sign shorter, smaller and more flexible contracts. Shell warned in its 2018 LNG outlook that this mismatch between supplier and buyer needs would have to be resolved to enable developers to go ahead with new projects.