Concerned about rising demand-supply gap of natural gas in the country, State-owned GAIL is bullish on acquiring shale gas assets in the US and plans to take its investments in that country to $300 million in the next five years. The Maharatna company has currently invested around $135 million in shale gas assets in the US
Shale gas is a form of natural gas that is trapped within shale formations. Shales are fine-grained sedimentary rocks that can be rich resources of petroleum and natural gas. Owing to modern techniques of drilling, over the past few years availability of gas from shale formations has rejuvenated the US gas production. This form of gas is economically viable also, which has raised its demand compared to other forms of gas across the globe.
According to information available, the demand for gas in 2013-14 was 371 mmscmd whereas the supply was only 184 mmscmd. In the current fiscal the demand is expected to be 405 mmscmd whereas the projected supply may remain around 198 mmscmd. By FY17, the demand for natural gas is likely to reach 473 mmscmd, while the supply could be only 305 mmscmd, as per GAIL's projections.
In such a scenario, industry sources pointed out that while GAIL is aggressively eyeing shale gas assets in the US, at the same time it is also eyeing liquefied natural gas (LNG) assets in destinations like Australia, Africa, Qatar as well as Russia in order to reduce the gap between demand and supply of the key natural resource.
Sources further pointed out that in the US, GAIL, apart from consolidating its presence in its existing Eagle Ford (shale gas) asset, would also be keen to acquire more upstream shale gas assets to take advantage of low valuations of gas assets in that country.
GAIL has invested around $135 million in shale gas assets in the US and in the next five years, it expects to invest around $170 million more in acquiring assets there. Towards fulfilling this, the State-owned entity intends to develop technological know-how for participation in the upcoming domestic shale gas bidding rounds. Official sources said that GAIL's aim is to increase access in overseas energy sources owing to India's limited gas reserves and rising demand for energy.
GAIL also wants to support its midstream and downstream business segments by sourcing gas as well as LNG from international sources including North America. Considering the recent developments, the US has emerged as a prime destination to scout for LNG.
Observers said that owing to its abundant shale gas resource and boom in shale gas production, the US is expected to have large surplus situation leading to opportunities for LNG export. There is lot of interest among Asian companies including GAIL to source LNG from US terminals, they added.
Apart from the quantum of LNG which is likely to be available from US, the factors which make the US an attractive destination for importing LNG is mainly due to minimal country risk in terms of fiscal stability. Also unlike other LNG projects in the world which take time to complete, in the US brownfield projects are available for conversion which reduces commissioning time.
Experts further added that US terminals are also cost competitive, as in owing to the brownfield nature of some projects and local availability of resources, US LNG terminal costs are likely to be competitive.
Shale gas is a form of natural gas that is trapped within shale formations. Shales are fine-grained sedimentary rocks that can be rich resources of petroleum and natural gas. Owing to modern techniques of drilling, over the past few years availability of gas from shale formations has rejuvenated the US gas production. This form of gas is economically viable also, which has raised its demand compared to other forms of gas across the globe.
According to information available, the demand for gas in 2013-14 was 371 mmscmd whereas the supply was only 184 mmscmd. In the current fiscal the demand is expected to be 405 mmscmd whereas the projected supply may remain around 198 mmscmd. By FY17, the demand for natural gas is likely to reach 473 mmscmd, while the supply could be only 305 mmscmd, as per GAIL's projections.
In such a scenario, industry sources pointed out that while GAIL is aggressively eyeing shale gas assets in the US, at the same time it is also eyeing liquefied natural gas (LNG) assets in destinations like Australia, Africa, Qatar as well as Russia in order to reduce the gap between demand and supply of the key natural resource.
Sources further pointed out that in the US, GAIL, apart from consolidating its presence in its existing Eagle Ford (shale gas) asset, would also be keen to acquire more upstream shale gas assets to take advantage of low valuations of gas assets in that country.
GAIL has invested around $135 million in shale gas assets in the US and in the next five years, it expects to invest around $170 million more in acquiring assets there. Towards fulfilling this, the State-owned entity intends to develop technological know-how for participation in the upcoming domestic shale gas bidding rounds. Official sources said that GAIL's aim is to increase access in overseas energy sources owing to India's limited gas reserves and rising demand for energy.
GAIL also wants to support its midstream and downstream business segments by sourcing gas as well as LNG from international sources including North America. Considering the recent developments, the US has emerged as a prime destination to scout for LNG.
Observers said that owing to its abundant shale gas resource and boom in shale gas production, the US is expected to have large surplus situation leading to opportunities for LNG export. There is lot of interest among Asian companies including GAIL to source LNG from US terminals, they added.
Apart from the quantum of LNG which is likely to be available from US, the factors which make the US an attractive destination for importing LNG is mainly due to minimal country risk in terms of fiscal stability. Also unlike other LNG projects in the world which take time to complete, in the US brownfield projects are available for conversion which reduces commissioning time.
Experts further added that US terminals are also cost competitive, as in owing to the brownfield nature of some projects and local availability of resources, US LNG terminal costs are likely to be competitive.
Next Story
