India needs to make its natural gas prices more remunerative to attract investments, said Christof Ruehl, BP Group Chief Economist.
This is not the first time BP has said this. The exploration major has been saying that clarity in gas pricing mechanism was vital for development of the next wave of projects in India.
Currently, the gas price in India ranges from $4.2/mmBtu to $16/mmBtu. Ruehl said that low prices depressed domestic production and increased consumption.
Sharing the highlights of the BP Statistical Review of World Energy, 2012, he said that “disruptions in supplies and ever increasing demand” were the two big stories of 2011.
Natural gas has produced some of the biggest changes in global energy markets over the last few years, Ruehl said, adding that “gas price increased broadly in line with oil prices, except in North America where prices reached record discounts both to crude oil and to international gas markets”.
There has been a rapid increase in trade, especially of LNG, that has connected hitherto segmented regions in an increasing flexible manner, he said.
“Also, the development of unconventional resources in the US, which has everyone wondering where gas may next turn into a relatively abundant resource,” was the other trigger for changes in the energy market last year.
Natural gas trade globally grew modestly by four per cent, driven by LNG growth of 10.1 per cent, with Qatar (+34.8 per cent) taking 87.7 per cent of the LNG increase, BP Statistics show.
World natural gas consumption grew by 2.2 per cent, below average in all regions, except in North America, where low prices due to shale gas revolution drove robust growth, Ruehl said. However, there was a decline in EU gas consumption (-9.9 per cent) driven by weak economy, high prices, warm weather and continued growth in renewable power generation, BP’s Statistical Review shows.
Gas production globally grew by 3.1 per cent. The US recorded 7.7 per cent growth and is the world’s biggest producer. Output grew rapidly in Qatar (25.8 per cent), Russia (3.1 per cent), and Turkmenistan (40.6 per cent).
This more than offset the decline in Libya (-75.6 per cent) and the UK (-20.8 per cent). The EU’s decline in gas production was highest on record (-11.4 per cent).