Reuters

By Aizhu Chen and Nidhi Verma
(Reuters) - measures taken by China and the India to increase local gas price will pave the way for increased imports of liquefied natural gas (LNG), then the two nations are trying to ensure that they can meet the demand increases rapidly for fuel.
Price of gasoline in both countries have been kept artificially low to levels well below the costs of LNG traded in the world, which means LNG importers suffer a loss or local LNG users pay a premium of high domestic prices.
India almost doubled last week the price of about $4.20 per million BTU (mmBtu) to a formula which will bring the price to about $8.40 per million BTU starting April 1, 2014.
China is a more modest reform, increasing the price of natural gas non-residential of 15 per cent, but the price will be higher at up to $10-$12 per million BTU in many coastal provinces.
Chinese and Indian gas demand is expected to soar in the next decade, driven by the growth of energy demand and the efforts made by China in particular to increase the amount of cleaner methane in its energy mix.
Gas prices will be more attractive LNG imports and encourage domestic gas developments.
"It is largely positive for LNG, as most LNG (Chinese) players are nervous of small competing gas sources (cost)," said analyst based in Beijing main gas Gavin Thompson of Wood Mackenzie.
"We will start to see a little more of the influence of China in the spot, LNG short-term markets than in recent years."
The cash price of LNG in China are about $14.50 per million BTU, while the India gas imports are $ 13 to $ 14 per million BTUS.
"I expect there will be some changes in the psychology of the consumer (India) and the reason for the request," said R.K. Garg, responsible for finance to Petronet LNG.
Imported from India 15,17 million tonnes of LNG in 2012, which would amount to 50 million tonnes by 2020, while demand in China, which has purchased 14.7 LNG, last year, is expected to reach 60 million tons by 2020, said Tri Zen International consultancy.
"We had assumed in the forecast higher prices, so do not think that recent hikes in both countries will be raises all changes in forecasts," said analyst of Tri Zen Tony Regan.
Gas India demand-supply: link.reuters.com/dec49t
China gas use 2000-2015: link.reuters.com/pyw28t
Price increases will also provide an incentive for investment in LNG import infrastructure.
"A formal indication of an increase in domestic prices will give clarity on potential future supply terminal re-gasification more developers,", said Gautam Sudhakar, senior analyst at IHS in Washington DC.
A few days after the price increase gas, energy Indian firm H called for tenders from contractors of the EPC for the construction of a terminal for LNG 8 million tonnes per year in the State of Maharashtra.
The India has plans for 83 million tonnes of capacity to import LNG on the books at the horizon 2020, the market for LNG prices which much may depend on whether if the developers feel that they can get.
Chinese importers may be more willing to ratify supplies in the short term with export facilities in Africa from the East, at the Canada and the United States, as well as more traditional suppliers such as the Australia and Qatar, experts say.
The lift domestic prices is also trimming losses to PetroChina(0857.HK) (601857.SS) Rudong and Dalian import terminals who contracted Zhanjiang and terminals of Fujian term expensive LNG from Qatar and CNOOC Ltd. (0883.HK) that will import LNG from Australia and Indonesia.
GAIL India Ltd. gas company (GAIL.)NS) has already contracted to about 8 million tonnes of imports of LNG of US, raising concerns about who will pay for the expensive imported gas.
"All the uncertainties have been put to rest now... pay a few more dollars per million BTU, for a more certain profile of 20 years will not be difficult to sell," said Karthik Sathyamoorthy, head of the Asia-Pacific at the energy consulting group of Galway.
(Writing and additional reporting by Rebekah Kebede in Perth;) Editing by Richard Pullin)
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