India is leading the call to bring down liquefied natural gas (LNG) prices. Itself the world’s fourth largest LNG importer, the country is seeking alliances with other large Asian consumers in order to pressure suppliers to stop using oil as a price peg for LNG, reaching out first to Japan and North Korea.
India and Japan had already established a multilateral natural gas buyers’ group in 2013 to push for lower prices. Now New Delhi is seeking to expand it to include other importers like China and Taiwan. This aim was reiterated by India’s petroleum minister Dharmendra Pradhan during the 5th IEF-IGU Ministerial Gas Forum: “A number of large Asian LNG buyers including India could benefit by joining hands and thereby bringing in more equitable trade deals.‘ While global gas prices have been sliding along with oil prices, in the last two years Asian countries, LNG’s largest overseas buyers, have continued to pay five or six times more for the commodity.
It will be no easy task to drastically cut gas prices, partly because producers adamantly defend using oil prices and long-term supply contracts as a price peg, but the recently signed OPEC deal to cut output could play into India’s hand. Dropping natural gas prices in the USA could enable American LNG exporters to give Asian countries a much better deal. If that happens, India could see its energy plans materialize and increase the share of natural gas in its energy mix from 6% to 15%, thereby lightening its dependency on crude oil imports.