Some industry observers suggest the government to liberalise natural gas sector in India in order to incentivise exploration and production by private companies.
They point out that like in the US, if gas market is liberalised, it will help IndiaÂ’s economy in more ways than what can be predicted.
Some industry observers argue that producers will be attracted to invest in gas exploration including shale gas. There will be no need to give the so called incentive price for shale gas exploration.
They cite the example of USA, which witnessed shortage of gas in 1978 when it regulated the sector. However once the sector was deregulated, not only there was surplus gas supply, the gas prices instead of increasing as predicted by the opponents of deregulation decreased, analysts argue.
In recent years, the totally deregulated US gas market had seen as high a price as $15 in 2005. Because of shale gas revolution it fell below $2, some analysts point out.
Similarly, the experience of UK and western European countries support the argument for deregulation, experts said. UK and western European markets have been dependent upon import of gas from Russia.
However, through gas market liberalisation, they have been able to force the dominant exporter Russia to delink gas prices from crude oil prices to some extent. This has resulted in lower gas prices in those markets than the oil linked gas market in Japan, Korea and Taiwan, experts argue.
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