Exxonmobil, Chevron Sniff India Opportunity In Trump's Russian Oil Threat

(MENAFN- Live Mint)

New Delhi: US energy giants ExxonMobil Corp. and Chevron Corp. are eying entry into India's LNG infrastructure business, including terminals and pipelines, said two people in the know, even as the two nations try to thrash out differences over New Delhi's Russian oil imports.

“American energy companies such as Exxon and Chevron are looking at investing in the gas infrastructure space here and directly selling their product," said the first person quoted earlier, speaking anonymously.“The gas space in India has been growing significantly and the prospects are good with the government's plans to expand the adoption of natural gas, thereby attracting global interest."

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Their interest coincides with US pressure on India to cut Russian energy imports and increase American supplies. India, the world's fourth-largest LNG importer, meets about half of its natural gas requirement with shipments from the US and Qatar. The two are raising LNG capacities, and analysts expect an oversupply of the fuel by 2028. The potential glut can be absorbed by India as the government targets increasing the share of gas in the country's total energy mix from around 7% to 15% by 2030.

So far, the US giants have been supplying liquefied natural gas (LNG) to Indian energy majors, including IndianOil Corp. and GAIL (India) Ltd. Their potential entry into the gas infrastructure business will pit them against Indian public sector competitors.

“The issue of US-based companies showing their interest has emerged during ongoing talks at various levels over setting up oil and gas facilities in India. Discussions are underway with concerned stakeholders and line ministries to take the matter forward," said the second person quoted above, speaking on the condition of anonymity.

Queries emailed to ExxonMobil, the US embassy in New Delhi and the union ministries of petroleum and commerce remained unanswered till press time. A Chevron spokesperson said:“We do not comment on market rumour and speculation as a matter of long-standing policy."

“Given India's burgeoning energy demand, it's important to source energy, including LNG from all possible sources," said Gaurav Moda, partner and leader for energy at EY-Parthenon India.“Further, more than competition to incumbent players, more global players in fact may help developing the market as India's gas market is still in a growing phase and has a considerably long time period to saturate."

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Russian oil bump

India and the US have resumed negotiations on the trade pact after President Donald Trump imposed 50% tariffs on domestic exports to the American market. US tariff on India includes a 25% penalty on New Delhi for buying Russian oil, a sticking point repeatedly highlighted by the Trump administration.

Mint reported on 25 September that the US has asked India to give an assurance, possibly in writing, that it will taper its purchases of Russian oil and boost imports of American crude before a trade deal between the two nations can be finalized.

Despite increasing their sourcing of energy supplies from the US, Indian refiners have maintained imports from Russia.

“The talks remain on track, and Indian negotiators are in discussions with their US counterparts to take the necessary steps to shape it into a mutually beneficial bilateral trade agreement (BTA)," the first person said.

Growing LNG capacity

India currently has seven operational LNG terminals with a cumulative capacity of 47 million metric tonnes per annum (mmtpa) and about 25,000 km of gas pipelines supplying to city gas distributors and industries. The seven operational LNG terminals include Dahej and Kochi operated by Petronet LNG; Hazira terminal operated by global energy major Shell; Dabhol operated by Konkan LNG Ltd; Ennore operated by IndianOil LNG Pvt Ltd; Mundra terminal operated by GSPC LNG Ltd; and Dhamra operated by AdaniTotal Gas Ltd.

Petronet is the joint venture of state-run GAIL, Bharat Petroleum Corp., Indian Oil Corp. and Oil and Natural Gas Corp., while Konkan LNG is a subsidiary of GAIL. GSPC LNG is a joint venture of the Gujarat and Union government entities, along with Adani Enterprises Ltd.

Shell was the first global energy company to take complete control and operate an LNG terminal in India. French major TotalEnergies entered in a partnership with Adani Group.

According to the Petroleum and Natural Gas Regulatory Board (PNGRB), an additional 10 mmtpa gas capacity is nearing completion at Chhara and Jaffrabad. Several land-based terminals and floating storage and regasification units are in various stages of planning and implementation at Jaigarh, Gangavaram, Kakinada, and Krishnapattanam, which will add 19.2 mmtpa capacity.

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“Completion of these planned capacities and expansions will require additional pipeline infrastructure and major capital investments," the regulator noted in a December report.

India imported about 16 million tonnes of LNG, considered a cleaner fuel compared to crude oil and coal, in the January to August period, growing 10% over a year earlier, according to ship-tracking data compiled by Bloomberg.

The US is among the top three suppliers of LNG to India, along with Qatar and the UAE. On 2 September, Union petroleum and natural gas minister Hardeep Singh Puri said that the country is raising its liquefied natural gas (LNG) import capacity by 27% to 66.7 million metric tonnes per year by 2030.

Already, Nasdaq-listed Crown LNG, an LNG infrastructure company, is looking at accelerating and expanding its operations in India to leverage the prospects of the growing energy trade between India and the US and is building an offshore terminal along the coast of Kakinada in Andhra Pradesh.

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