India willing to consider long term fixed price contracts for gas supply
The government of India expressed willingness to consider long term fixed price contracts for the supply of gas which will enable power producer to enter into a power supply contract at an affordable price.
Piyush Goyal, Minister of State for Coal, Power and New Renewable Energy, said opportunities to control the entire value chain right from gas production, liquefaction, shipping, re-gasification and power generation can be evaluated at the current historic low prices of many of these activities. The Minister is leading a delegation for the 3rd India-Australia Energy Security dialogue in Australia.
India is running one of the world’s largest renewable energy programme which aims to increase the capacity 5 times to 175 GW over the next seven years. This will require gas based plants which can act as spinning reserve and supply power during deficit times of day (like evenings) when renewable energy production reduces while stabilizing the grid.
Since coal based power is available in India at less than 5 cents per unit, the LNG providers should consider supplying gas to India at a price that is comparable.
In order to explore the opportunities to affordably supply Australian LNG to India, an LNG sub-group has been created under the joint leadership of a Joint Secretary, Ministry of Petroleum and Natural Gas and a senior Australian official. They will be further supported by an operating team as well as representatives from NTPC, GAIL, Petronet LNG and shipping companies. The sub-group will create a roadmap for the collaboration over the next two months.
The Australian Companies highlighted how technologies have been highlighted to reduce cost of producing natural gas and clear shipping routes between Australia and India provide ample opportunities to provide LNG to India at competitive rates. Additionally, with large increase in coal exploration and production in India, Australian companies can provide Coal Bed Methane (CBM) technologies to India.