The steep fall in oil and gas prices offers India the perfect timing to press the US to ease norms for importing gas.During US President Barack Obama’s Republic Day visit, Prime Minister Narendra Modi is expected to raise the complexities Indian businesses face in importing gas from America.
According to those associated with the business, importing gas from the US is not easy as New Delhi does not have a free trade agreement with Washington. Gas can be sourced only from projects that are approved to sell to non-FTA countries.
To complicate issues, Washington, according to the sources, has decided to invoke a law that mandates that the ships carrying gas should fly the US flag and have an American crew.
This is likely to become effective from 2018, just around the time India expects to get its first US packet — GAIL (India) will get a liquefied natural gas shipment from Sabine Pass Liquefaction LLC, a subsidiary of Cheniere Energy Partners, LP.
In 2011, GAIL entered a contract for 20-year supply of 3.5 million tonnes per annum of LNG from the project.
Legal aspects
“According to the agreement, GAIL will buy gas at Henry Hub, the US gas price indexation.
“The deal also stipulates that LNG will be loaded onto a GAIL vessel. GAIL is now looking at the legal aspects of the US law on ships,” another official said. During Obama’s visit, Modi is likely to urge the US to be considerate towards Indian firms that buy crude oil from nations hit by Western sanctions.
As another source said, “Intensive discussions are on the cards on the energy front — nuclear, gas imports, and consideration towards Indian companies which are doing oil business with sanction-hit countries in West Asia or Russia.”
Though the sources did not give out any details, they said the Ministry for Petroleum and Natural Gas has flagged the issues with the Prime Minister’s Office and the External Affairs Ministry ahead of the Obama visit.
Source:- timesofindia.indiatimes.com
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