India Inc seeks waiver from US to import fuel, acquire assets.

NEW DELHI: Even as India reduces oil imports from Iran, New Delhi has asked Washington for a special exemption that would allow Indian companies to import liquid gas in ships from the US.

Acting on a request from state-run gas utility GAIL, India sought the exemption during the recently-concluded strategic dialogue in Washington. Sources said the issue formed a significant part of the discussions on energy cooperation. The US is yet to revert with a decision.

From a gas guzzling economy, the US has turned into a net energy exporter on the back of huge quantities of shale gas and oil becoming available commercially. Washington, however, allows gas exports only to free-trade partners. Countries such as India that do not have a FTA (free trade agreement) are not allowed to tap into the US energy lifeline.

The sources said GAIL chairman B C Tripathi had moved the government to lobby the US by arguing that FTA curbs practically turn any Indian equity acquisitions in US shale gas assets into a mere portfolio investment since Indian companies cannot bring gas to India. This defeats one of the main aims of overseas acquisitions — supplementing home supplies.

GAIL recently bought a 20% stake in Eagle Shale Asset (Texas) and inked a deal to source 3.5 million tonne of liquid gas by a Louisiana-based company, Sabine Pass Liquefaction. It is also scouting for more such equity acquisitions and supply deals.

Private sector Reliance Industries too has invested $3.5 billion in US shale gas assets.

Rising demand and falling domestic production has pushed up the share of imported gas to 40% of current consumption in India. But a flagship utility like GAIL cannot access liquid gas from any of the seven LNG terminals - industry parlance for facilities to export gas in ships - coming up in the US as the Department of Energy has not approved exports to non-FTA countries.

"This implies that GAIL, as a representative company of India, cannot conclude any contractual arrangement with these seven LNG terminal companies till the time non-FTA approval is given to them. This is coming in the way of GAIL's efforts to finalize liquid shale gas exports from USA to India, whereas time is very ripe now to strike LNG deals at competitive prices," Tripathi had written to the government ahead of the US talks.

Tripathi said GAIL is sourcing gas from the US at competitive prices benchmarked to Henry Hub - the US pricing point for gas contracts on the New York Mercantile Exchange. These prices are three-four times lower than global liquid gas prices that are linked to crude.

US census reports say, top export this year is slated to be fuel, probably the first time in over half a century that the US is exporting energy. In the first 10 months of 2011, the US, say official figures, exported 848 million barrels (worth $73.4 billion) and imported 750 million barrels.

Source : timesofindia.indiatimes.com