India banks on Canada to skirt US gas export ban

NEW DELHI: India is trying to include Canada into the supply equation as it prepares to become an importer of energy from the US. But the plan may meet with only a limited success because of third-country pricing economics.

New Delhi has been lobbying Washington for a special dispensation to ship liquid gas from the US. Washington does not allow energy exports to countries that do not have a free trade agreement (FTA) with it.

Because of this ban, India's state-run gas utility is feeling hamstrung in its efforts to strike big deals for importing liquid gas from the US. The company in December signed a contract to import shale gas from Cheniere Energy's Sabine Pass facility and is close to clinching another such deal worth $12 billion.

While the political process to break the logjam over the US energy export ban to non-FTA countries continues, India is trying to work its way around the problem by roping in Canada that has a pipeline network with the US east coast.

India is hoping that it can route US gas — and later, perhaps, shale oil — through Canada. As an FTA partner of the US, Canada will be free of the constraints that currently keeps US energy a difficult draw for India.

But industry executives said the plan may have limited applicability which would depend on from where in the US the gas is coming. Government sources also admit that routing supplies through Canada could involve additional carrying cost, and that could push up the final price.

But politically at least, the Canadian option looks viable. India and Canada are wooing each other as strategic partners waiting for lift-off. Prime Minster Manmohan Singh met his Canadian counterpart Stephen Harper on the sidelines of the G-20 summit in Mexico in June.

Foreign minister S M Krishna followed up that summit by meeting his counterpart John Baird in Toronto. Canada has been supportive of India's bid to join the four non-proliferation regimes at the recent NSG plenary in the US. Harper is expected to visit India in November on a state visit.

India and the US are expected to hold the next round of an annual energy dialogue in September, where New Delhi is expected to follow up on issues blocking energy imports.

Source : timesofindia.indiatimes.com