“I would be surprised if sourcing of energy (by India from the US) does not feature in the talks (during PM Modi’s upcoming US visit)…With President Trump saying that he wants to see global (energy) prices to come down…for countries like India, that is a very positive development,” Petroleum Minister Hardeep Singh Puri said Monday.

According to industry watchers, apart from securing more LNG for India’s growing natural gas consumption, higher energy imports from the US could signal a reduction in New Delhi’s trade surplus with Washington amid Trump’s hard talk and tariff threats. A few other countries have already signalled that they are interested in buying more LNG from the US, evidently in a bid to balance their trade with Washington.

India is already among the top LNG importers in the world. The government wants the share of natural gas in India’s primary energy mix to grow to 15 per cent by 2030 from a little over 6 per cent at present. Given limited domestic production of natural gas, the growth in gas consumption is expected to be driven by higher LNG imports. Over the years, India has been expanding LNG import and regasification capacity to support higher imports of the fuel.

Jain said that GAIL, IOC, and BPCL, among other Indian companies, are interested in inking additional term contracts for LNG, or super-chilled gas, with American suppliers, but did not elaborate further as such deals are commercial decisions of individual companies. The Petroleum Secretary added that Indian companies may be open to picking up stakes in US LNG projects, as opposed to just entering into a supply contract, if the proposition is financially lucrative and helps secure LNG at an affordable price.

Currently, GAIL has term LNG contracts totalling 5.8 million tonnes of US LNG. The bulk of India’s long-term LNG volumes come from Qatar. LNG prices under the term contracts with Qatar are linked to crude oil prices, while supply contracts for US LNG are usually linked to the Henry Hub prices, a benchmark for LNG prices in the US.

According to Jain, Indian LNG importers should ideally have a portfolio of contracts with different pricing principles in order to mitigate risks of price volatility in either pricing formula.