India’s oil and gas imports from America are likely to witness an uptick  with US President Donald Trump seeking increased offtake of the two products by India. However, the country is expected to consider the  price-sensitive nature of the Indian market and accordingly price the commodities, say experts.

India is dependent on imports for 85 percent  of its crude oil and 50 percent of its natural gas requirements.

To ramp up crude supplies from the US, Indian refiners would have to negotiate a deal to compensate for the higher cost of freight compared to oil from the Middle East. “The OMCs (oil marketing companies) have thin margins, so offtake of US oil by India will have to make economic sense for its volumes to rise significantly. But it's a different story  for LNG, given that the US is the cheapest source of gas,” said Prashant Vasisht, VP and Co-Head, Corporate Ratings, ICRA.

“We have to increase our LNG (liquefied natural gas) imports. We currently import 95 mmscmd (million metric standard cubic metre per day), whereas our total demand is  195 mmscmd, which is expected to grow 5-6 percent, minimum, per year. Domestic supply is not going to fulfil this demand. So, our requirement will keep going up,” said an analyst on condition of anonymity.

“If we can figure out a pricing formula that is advantageous, we can secure US LNG supplies under a long-term trade agreement, which should be a positive for India,” the analyst added.

India’s gas demand is forecast to rise in the coming years as the country aims to become a gas-based economy, increasing the share of the ‘transition fuel’ to 15 percent of its energy basket by 2030, from around 6 percent currently.

Source: Moneycontrol

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A `transition fuel' is one that is less carbon-intensive than traditional fossil fuels like coal and oil, used as a bridge to facilitate the shift towards fully renewable energy like solar and wind power. Natural gas is the most common transition fuel.