A comprehensive policy on LNG import will be announced shortly, Ram Naik, Minister for Petroleum and Natural Gas, has said, adding that the government is considering lending infrastructure status for LNG import projects.

Talking about the country's dependence on energy import, the minister said that due to increase in crude oil prices, our oil import bill during the last two years has gone up from US$ 6.3 billion (Rs 26,000 crore) in 1998-99 to about US$ 18 billion (Rs 80,000 crore) in 2000-01. It is imperative to create an optimal basket of commercial energy (imported fuels) which is cost-effective and environment-friendly. Keeping this in mind, the import of natural gas, both through LNG and the pipeline route, is the most appropriate for the country's benefit and saving precious foreign exchange.

It is interesting to note that while oil trade is about 24 per cent of world total energy consumption, the gas trade is just 4.5 per cent of the total energy consumption and LNG trade a mere 1 per cent. Obviously, it leaves much scope for utilisation of LNG in a country like ours. It is important to understand that natural gas will play a dominant role in total energy supplies during the 21st century mainly because large inventories of gas reserves are available which need to be monetised. The Centre is making a continuous effort to import gas from West Asia through pipeline and the LNG route, he said. In the Indian context, it is notable that LNG has become a viable fuel to import specifically at the coastal location where the piped gas may not be economically competitive due to the large distance of transportation from the producing field.

Referring to the "India - Hydrocarbon Vision 2025" as the Bible for the development of the hydrocarbon sector in the country, Naik said natural gas is projected to grow from a current level of 8 per cent to about 20 per cent by 2025. The utilisation of natural gas has been accorded the highest priority in the Hydrocarbon Vision document prepared by the union government, so that the share of green fuel increases in the energy basket.

The minister has also drawn attention towards the demand supply gap for natural gas and stated that it is likely to go up to 284 million standard cubic meters (MMSCMD) per day by 2011-12. In this regard, it is very important to focus on gas imports through the LNG route. The ministry for petroleum and natural gas, in a bid to enhance production of natural gas from domestic basins by way of exploration, has given contracts for 24 blocks under the New Exploration Licensing Policy (NELP) last year and has offered 25 new blocks under the second bidding round of NELP. The minister has hailed Cairns Energy (India) Private Limited for achieving remarkable success in having first successful breakthrough with a major deep water gas discovery in the Krishna Godavari basin (offshore Andhra Pradesh) under NELP. The depth at which the gas discovery has been made is 1000 metres, indicating that there is a very high potential for oil and gas in deep water areas of the country.

It is worth mentioning here that Unocal Bharat Services Limited, a subsidiary of Unocal Corporation is proposing a 1350-km, 30-inch diameter pipeline that would extend from Habibganj District in Bangladesh to the interconnection with the HBJ pipeline which is owned and operated by the Gas Authority of India Limited.

It is a fact that the LNG industry in India is in a nascent stage of development and requires a support for its healthy growth and development like other industries which have grown during the past few decades. As the gas imports are cheaper compared to oil imports, it is obvious that this industry grows faster at a stable rate. Some of the issues pending before the union government are granting infrastructure status to LNG import, Tariff rationalisation and tax holidays to make the product more viable. However, the exemption of Countervailing Duty (CVD) on LNG is one of the steps of government's determination to facilitate the growth of this sector.

Currently, LNG imports are inevitable, but a judicious mix of gas sources would need to be evolved for the country. Proper risk mitigation methods would speed up the LNG import projects. Gas pricing is an important issue which needs to be addressed for proper development of gas industry and awareness among consumers is a pre-requisite for successful LNG projects.