Washington: In an effort to “re-energise” ties, Prime Minister Narendra Modi will kick off his visit to the United States with a major LNG investment deal which is expected to be announced right at the beginning of his visit. His first engagement as he lands in Houston, Texas will be a roundtable with top executives of 16 oil and gas companies, including LNG major Tellurian Inc. that is developing a $28 billion LNG terminal project called Driftwood in Louisiana. In February this year, Indian PSU Petronet LNG inked an MoU with Tellurian to buy an equity stake in the project, and industry insiders say officials are rushing through the details in time for Mr. Modi’s meeting on Saturday.
The Prime Minister’s roundtable, to be held at America’s energy hub Houston, is expected to send a three-pronged message the evening before his joint rally appearance with U.S. President Donald Trump, said officials planning the visit: to showcase India as a major energy consumer and investor, a provider of jobs for Americans, and a destination for future U.S. exploration and regasification projects. Compared to 2018, India has imported more than three times as much oil and twice as much gas from the U.S. this year, and it is hoped that the inflows of Indian oil payments will soften Mr. Trump’s concerns about the trade deficit between both countries, ‘greasing the wheels’ for a potential breakthrough in the trade impasse between both countries.
To push for sops
In addition, the fact that India has dropped its oil imports from Iran and Venezuela in deference to U.S. sanctions, and that China has cut American LNG imports in their ongoing trade war will both be leveraged to push for concessions on energy supplies, particularly on shipping costs, the officials said, as the Prime Minister will stress that energy is now a “buyer’s market.”
“We import approximately $4 billion worth of oil and gas from the United States and this interaction that Prime Minister will have with the energy majors of the United States is essentially not only to show that we are an important market but also to discuss investment and other possible opportunities in the economic area,” Foreign Secretary Vijay Gokhale told reporters in Delhi ahead of the visit.
Among the companies expected to attend the Prime Minister’s roundtable are BP, Cheniere, Dominion, ExxonMobil, Schlumberger, Tellurian and Total. An executive amongst the invitees, who preferred not to be named, said that while there is considerable interest in the Indian market for gas and shale, India’s distribution networks are wholly inadequate to deliver LNG, and demand has not grown as much as they had hoped.
In 2011, GAIL, which is one of the major owners of Petronet, had entered into a 20-year contract to buy 5.8 million tonnes per year of U.S. LNG, split between Dominion Energy and Cheniere Energy. However, the long shipping time taken from the U.S. to India, recent downturn in key manufacturing sectors, as well as industry’s continuing dependency on coal have meant Indian demand for LNG imports hasn’t kept pace with supply. Over the past year, many U.S. LNG cargoes bound for India have had to be resold via “swaps” in other markets.