India and Japan are considering joint tenders for the import of liquefied natural gas (LNG) in a bid to reduce the price of LNG imports in Asia, which is currently four times more expensive than in the US.
Increased demand for LNG in Asia, the world’s largest importer of LNG, has seen prices rise accordingly as countries such as Japan and South Korea wean themselves off nuclear energy, and China try to reduce reliance on coal.
With prices now near record levels, India and Japan are seeking ways to quell the cost of importing gas. In September, the two countries agreed to analyse ways of jointly buying LNG supply. A joint tender has been identified as one potential option.
India's oil secretary, Vivek Rae, said: "It is a very serious move, which means when you float a tender, maybe Japan and India could combine and can float a joint tender and see what price comes”.
Rae said that details were being worked out at ministerial level and that Japan had designated a domestic corporation to work on its behalf. GAIL (India), he stated, would be India’s nominee.
B.C. Tripathi, the GAIL chairman, revealed that GAIL has arranged a meeting with a Japanese company in January, to discuss the possibility of joint procurement of LNG. Although the name of the company was not disclosed, Tripathi said that a plan would be developed within three months.
Meeting to strengthen Asian incentive
Tomorrow, Asian countries that account for 70% of the world’s LNG imports will meet to discuss decreasing the price of LNG supply deals. Such meetings may instigate the formation of a group that could counter the Gas Exporting Countries Forum, a group made up of 13 gas-producing nations, including Algeria, Iran, Nigeria, Oman, Qatar and Russia.
However, sellers such as Chevron Corp and Exxon Mobil Corp contend that multi-year supply contracts are essential as insurance for the cost and time of developing multi-billion dollar projects, which can take years to mature.
In Asian nations cannot ensure a reduction in the price of natural gas, some think that they could shift to coal.
Edited from various sources by Ted Monroe
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