 "Maria Van der Hoeven executive director, IEA")
Maria Van der Hoeven, executive director, IEA, said in India, natural gas prices were heavily regulated. “India could consider its transition towards a more market-based model. But you have to do it step by step. New gas price regulations that will be in place next year will also be the next step forward,” she said on the sidelines of the Eighth Asia Gas Partnership Summit here.
Paris-based IEA is an inter-government autonomous organisation in the energy sector with 28 countries, including the US, Australia and major European nations as members.
The Indian government has decided to link domestic gas price to a mean of two averages — the producer price of liquefied natural gas imports to India and the price prevalent in the US, Europe and Japan — from April 2014. The formula has been opposed by Reliance Industries Ltd, the largest private sector player in the domestic natural gas market.
On the specific issue of whether subsidised retail price had an impact on investment in oil and gas exploration, she said, “You need investment but it will come if there is a certain price. If prices are too regulated and fixed at too low levels that they don’t cover costs, they impact investment.”
She said there was a strong determination in India to reduce import dependency. “Diversification of supply will have its impact.” India has recently launched shale gas exploration for state-owned companies. In January, it is planning to launch the tenth round of auctioning for oil and gas blocks.
The Asia-Pacific region would be the arena where gas battle would be fought. Van der Hoeven said the question with regard to unconventional gas was whether this could be the same kind of game-changer as it has been in the US. “There are different challenges to be met here — quality of resources, cost of production, water issues, environment concern, gas industry, infrastructure and public acceptance.”
For commercial production however, it is transport infrastructure, fiscal regime and price that would be important. “Prices have been too low for shale. We expect commercial production of shale gas and coal bed methane to start by the end of this decade,” she said.
The IEA chief said India was doing a great thing for access for all because it is looking at the situation of subsidy for fossil fuels and making changes in such a way that those who can afford, pay and those who cannot, are helped. By 2035, the country would be the largest importer of coal, second largest for crude oil and third largest for natural gas.
Iran deal impact
Van der Hoeven said 37 million barrels of floating crude oil might bring relief in the oil market. “Iran would want to get rid of it,” she said. Any additional production from Iran would not happen immediately, since ramp-up would take time.
