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№ 10 (October 2011)

Russia's Gazprom Eyes LNG Trade Opportunities Offered by India

India is an "incredible" gas market where the significant domestic supply shortfall offers a huge opportunity for a portfolio LNG player such as Gazprom, Nigel Kuzemko, the global director of LNG development at the Russian state-owned company's trading arm said Tuesday.

By Platts' analysis

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"Current demand for natural gas in India is around 120 Bcm/year, equivalent to around 88 million mt/year of LNG," Kuzemko told the Australia Gas Conference in Sydney. "The supply gap is part of that [demand figure]. They believe you could sell 120 Bcm but they only actually do sell 60 Bcm because there is only 60 Bcm available. There is a supply gap of 60 Bcm in India today, and that's quite significant," he said.

"For organizations such as Gazprom Marketing & Trading, this obviously represents a huge opportunity and we see India as one of our key markets for LNG supplies, along with Japan, South Korea and other North Asian countries, as we continue to strengthen our presence in operations in the Asia Pacific region."

Kuzemko also cited the rapidly growing Indian market for natural gas for vehicles. There are already around 1 million gas-powered vehicles in India, but in about three years' time the country will see 300,000 gas-powered cars being manufactured, he added.

"That is actually quite amazing," Kuzemko said. "We've wondered about the penetration of gas-powered vehicles in the US and Europe, but ... India has already done it. What does that mean for gas demand? Nobody had any idea it was going to happen, [compressed natural gas] went from zero to 5% of current demand in India ... just because gas was available. Nobody predicted it, noboday saw it. That's scary," he said.

In recent months, Gazprom has signed four preliminary deals with Indian companies -- state-owned gas distributor GAIL, Gujarat State Petroleum Corporation, Petronet LNG and Indian Oil Corporation -- to supply a total of up to 10 million mt/year of LNG from its portfolio.

Gazprom is targeting a total LNG trading volume of 62 million mt/year by 2030, with 18 million mt/year to be sourced from outside Russia. "At first blush, 62 million mt/year sounds unrealistic but when your resource base is 1,200 Tcf of conventional reserves, and we haven't even looked at the unconventional reserves in Russia, which are probably significantly higher ... you can see such a plan is feasible," Kuzemko said.
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