Low prices of liquefied natural gas (LNG) in the global markets provide a good opportunity for India to tie up long-term contracts, according to Fatih Birol, Executive Director of the International Energy Agency.

Birol, who was in New Delhi to release the India Energy Outlook 2015, said there is expected to be a further downward pressure on LNG prices as new suppliers come into the market.

“We think a new and very important gas market is developing in Asia with a demand of about 400 billion cubic metre and I can tell you that US, Russia, Australia and even some African countries are eyeing this market,” said Birol. “We think it is important to look at the window of opportunity here. LNG prices are on the low side and a number of projects coming on stream in the next few years, this is right time to look at tying up contracts,” he added.

While appreciating the increasing demand for LNG in Asia, Birol said there is competition from coal and renewable energy in India.

The IEA predicts that India’s energy demand will be close to that of the US by 2040 but per capita demand will still be 40 per cent below the world average. The agency also estimates that India’s energy sector will require $2.8 trillion of investment till 2040 and its oil import dependence will increase over 90 per cent.

Birol said India requires an annual investment of $110 billion in the energy sector till 2040 of which 75 per cent needs to be in the power sector.

Meanwhile, Birol said that global crude oil prices are expected to be in the $50 a barrel range over the next 10 years while converging towards $80 a barrel by 2020.

The IEA estimates that every $1 a barrel drop in oil prices helps India save $1 billion in its oil import bill. “A low price world is good news for oil importers. But it means that the world’s reliance on West Asia increases substantially. In a lower price $50 a barrel world, production in US, Russia and Brazil will go down while production in West Asia maybe able to increase,” said Birol.

However, Dharmendra Pradhan, Minister of State (Independent Charge) for Petroleum and Natural Gas, argued that the world is not the same anymore.

“There are a lot of alternatives for the world to get crude oil even if some markets find production at $50 a barrel unsustainable. While I appreciate your (IEAs) outlook, I think it underestimates Africa’s potential. We believe it will be the next energy hub of the world,” said Pradhan.

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