BY MOHAMMAD SHOEB
DOHA: The negotiations between India and Qatar to supply an additional three to four million tonnes (mt) of liquefied natural gas (LNG) a year, are still going on, the Minister of Energy and Industry H E Dr Mohammed bin Saleh Al Sada said.
Al Sada, while speaking to The Peninsula on the sidelines of an agreement signing ceremony held to set up ‘Nebras Power’ company, said that Qatar was also keen to meet India’s growing LNG demand, and dialogue between the two parties were on.
Gas Authority of India Ltd (GAIL) and some private companies from the energy-starved economy, which sources nearly 13-14 percent of Qatar’s LNG exports, has sought an additional Qatari gas, but talks are lingering over a mutually agreed pricing.
Asked if price was the main factor for the delay in additional supply of gas to India, the Energy Minister said: “There is no specific reason for the delay. Qatar shares a special relationship with India. Demand for LNG in India is increasing, and we are discussing with the parties to supply more gas.”
According to reports, the delay in the proposed deal is learnt to be due to pricing, as Qatar is asking for a price which is 15 to 16 percent of the Japanese Crude Cocktail (JCC), the average price of customs- cleared crude oil imports to Japan, while India is willing to pay 14.5 percent of JCC.
Qatar, taking a cue from the rapidly changing global energy dynamics, is shifting its LNG export base from Europe to Asia. The share of Qatar’s LNG exports to Asia has reached 73.5 percent in January 2013 witnessing a sharp jump of over 30 percent as compared with 56.4 percent in 2012, according to Barclays’ latest market research.
The LNG shipment from Qatar to Japan increased 4.1 mt, or 35 percent (year-on-year) followed by South Korea (+2.9 mt) with 37 percent increase, and China (+2.7 mt) witnessing a massive growth of 118 percent. Meanwhile, the UK suffered by far the largest losses of Qatari LNG last year, down six mt, or 37 percent, from 2011.
Recent developments in the energy markets, especially due to a silent revolution in the production of unconventional oil and gas (shale) in the US indicate that foundations of global energy system are shifting rapidly in favour of importers as they have a better bargaining position.
This major shift is driven by three important factors, one of them being surprising increase in oil and gas production in a few courtiers such as the US, Canada and Iraq.
“We expect a significant increase in oil and gas production in these countries which will change the dynamics in the global energy market soon,” Dr Fatih Birol, Chief Economist at International Energy Agency (IEA), said during a presentation of Global Energy Outlook 2012 in Sweden recently.
Secondly, after the Fukushima incident in Japan, there is a retreat from nuclear power in some countries such as Germany and Switzerland. And, very recently, Japan, a major nuclear energy reliant country, announced that by 2030, it will have zero nuclear power in its energy mix.
And, thirdly, analysts suggest that the recent fuel efficiency standards for cars, particularly in the US, will further shift the global energy dynamics.
In addition, natural gas prices in Europe are five times those in the US, and eight times those in Asia. This big difference in gas prices in the US and the rest of the world is very critical, providing price competitive edge to the US.
The US, the world’s largest energy consumer, and until recently the world’s largest energy importer, has witnessed a rapid growth in unconventional oil and gas production. And experts believe that within the next five years, it will become the world’s largest oil producers replacing Saudi Arabia, something that was difficult to imagine few years ago.
“The centre of global energy is moving from West to East. Until mid 1970s the OECD countries consumed two third of global energy, but very soon its share will decline to one-third; and people in China, India and the Middle East, in search of better life, will consume more of energy,” added Birol.
The Peninsula
