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Modi in Houston: U.S. energy companies eye Indian market for growth
As India seeks to diversify its power generation mix, U.S. energy companies, and in particular those from Houston, are vying to get a piece of a pie that experts believe may over the next three years be worth $100 billion.
With India currently getting more than half of its electricity from coal, Indian Prime Minister Narendra Modi wants to grow natural gas to make up 15 percent of the nation’s power generation mix by 2030.
As part of this weekend’s whirlwind tour of Houston, Modi met with the CEOs of 16 energy companies on Saturday. One key item discussed was India cutting its corporate tax rate to 25 percent from 35 percent.
“They were very encouraged by the decision we have taken to reduce corporate tax,” Modi told an audience of 50,000 during a joint appearance with President Donald Trump at Houston’s NRG Stadium on Sunday. “Their feedback was that the decision will send a very positive message and will make India more globally competitive.”
But it’s not just lower tax rates that are attracting U.S. energy contracts to India, it’s big dollar contracts. Modi’s energy CEO roundtable included the signing of a $2.5 billion deal between Houston liquefied natural gas exporter Tellurian and Indian natural gas importer Petronet LNG.
Touted as one of the largest liquefied natural gas deals in U.S. history, Petronet LNG will invest in Tellurian’s planned Driftwood LNG export terminal in Lake Charles, La., to secure 5 million metric tons of LNG per year. The deal comes amid rapidly growing energy demand in India and record production of crude oil and natural gas in the United States, driven by horizontal drilling and hydraulic fracturing in the nation’s shale plays.
India buys most of its oil from the Middle East but imported more than 13.9 million barrels of U.S. crude oil in June, figures from the U.S. Energy Information Administration show. The subcontinent imported more than 57.6 billion cubic feet of natural gas from the United States in 2018, ranking India as the fourth largest importer of U.S. LNG.
“These tremendous exports not only expand employment in America, they increase freedom and security for India,” Trump said during Sunday’s rally with Modi.
Opportunities for the U.S. energy sector are expected to grow in India, particularly in the natural gas sector. India plans to invest $100 billion in LNG import terminals, natural gas pipelines and last-mile distribution services, according to figures from Mercom Capital Group, a clean energy research and communications firm with offices in Austin, New Delhi and Bangladore, India.
With one-third of land mass of the United States but four times the population, India has roughly 10,000 miles of natural gas pipelines compared with more than 156,000 miles in Texas. On top of ambitious natural gas goals, India wants to switch to 100 percent electric vehicles by 2030 to eliminate dependence on foreign oil — creating business opportunities for natural gas and renewables such as wind and solar.
“Going forward into 2030 and 2040, India is going to be the largest growth market for energy,” Mercom Capital CEO Raj Prabhu said. “China grew a lot over the last couple of decades but is stabilizing. From here on out, India’s going to need a lot of energy because they’re still behind in terms of GDP. As the country grows, they’re going to need a lot more energy and it will be an all of the above approach.”
But India is not going to completely abandon oil. The South Asian nation has built up a robust petrochemicals and refining sector, of which Houston oil field service company McDermott International helped to build several facilities.
McDermott International CEO David Dickson on Saturday participated in Modi’s roundtable discussion but could not attend the rally with Trump and Modi on Sunday due to an upcoming board meeting in London. Nonetheless, the company expects demand for petrochemicals and polymers in India to grow this year by 9 and 10 percent, respectively.
“McDermott has extensive plans to invest in our offices in India,” McDermott said in a statement. “We currently have close to 1,000 open positions for which we are hiring in our offices in Gurgaon and Chennai, and we plan to continue to grow our presence locally to support our global operations.”