Regional LNG: Release: ABARE: Indian gas demand creates opportunities for LNG exporters

(Canberra, Dec 20, 2007) Natural gas consumption in India has the potential to rise significantly ? from 32 billion cubic metres in 2005 to 82 billion cubic metres in 2025 ? supported by robust economic growth and an expanding population, according to a new ABARE report.

The report, Natural gas in India: prospects for LNG imports, was released today by ABARE Executive Director, Phillip Glyde.

?ABARE projects India?s natural gas demand to rise to 82 billion cubic metres in 2025, or 99 billion cubic metres under a high economic growth scenario, with continuing demand from the electricity, fertiliser and industrial sectors,? said Mr Glyde.

?This could create opportunities for gas exporters such as Australia. Australia has the potential to significantly expand its liquefied natural gas (LNG) exports over the period to 2025, with a number of projects under construction and planned. To date, LNG trade between Australia and India has been limited to a few spot cargoes,? Mr Glyde explained.

?Realising this potential expansion in India?s gas use will depend on several issues, including gas availability, further development of the gas pipeline network, and implementation of gas and end user market reforms.?

?In particular, continued deregulation of the domestic gas market, the transition toward market based gas pricing and encouraging further private participation in the gas market will be important,? Mr Glyde said.

The ABARE report noted that India has three options to meet the anticipated growth in natural gas demand over the period to 2025 ? increase domestic gas production, increase LNG imports, and import natural gas via pipeline. The planned production of gas from India?s recently discovered fields in the Krishna Godavari basin from late 2008 is expected to slow the declining rates of gas production in India as existing gas fields mature.

?LNG is the most likely form of gas imports for India in this timeframe.?

Assuming all India?s gas import requirements are met by LNG, India?s total LNG imports could increase from 9 billion cubic metres (6 million tones) in 2006 to reach 42 billion cubic metres (31 million tones) by 2025, or 59 billion cubic metres (43 million tones) under a high economic growth scenario.

?The requirement for additional gas supplies will pose a challenge for India in the coming years. Given the tight supply?demand balance expected for LNG over the medium term, India is likely to face competition from established and new buyers for LNG cargoes,? Mr Glyde concluded. (End of Release)

ED. Note: ABARE: The Australian Bureau of Agricultural and Resource Economic.