City gas distribution player, Gujarat Gas Company Ltd (GGCL) has entered into an agreement with state-run Gujarat State Petroleum Corporation Ltd (GSPC) for purchase of 1.1 million standard cubic meters per day (mmscmd) of re-gasified LNG (RLNG) during January. This translates into about 33 per cent of the company's gas requirements for the month of January.
In a statement filed with the Bombay Stock Exchange (BSE), GGCL informed "The company has on December 27, 2012 entered into an agreement with Gujarat State Petroleum Corporation Ltd for the purchase of re-gasified LNG (RLNG) volumes of up to 1.1 mmscmd for the period from January 01, 2013 to January 31, 2013 on a firm basis."
Against its monthly gas requirement of 3 mmscmd, GGCL buys about 1.5 mmscmd of RLNG from spot market, while rest of the requirement is met through domestic gas supplies from its long-term suppliers including GAIL and Cairn. "Our contract for RLNG supplies with BG gorup subsidiary, BGIES expired in December 2012. This required us to look for other sources for 2013. We have developed a multi-source portfolio for RLNG supplies. For January, we got competitive offer from GSPC," said Sugata Sircar, managing director, GGCL.
In the past, the company had also sourced RLNG from suppliers like IOC and Shell.
Commenting on the prices of LNG, Sircar mentioned that the prices have increased in the last quarter of year 2012. Prices were soft till September. But we have seen prices hardening from November onwards and expect similar trend till January due to strong winter consumption demand," he said.
International LNG prices quoted in the range of US $ 13-14 per million metric British thermal unit (mmBtu) in July-August 2012. From November onwards the prices started soaring and touched US $ 19 per mmBtu.
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GGCL, which is one of the largest city gas distribution companies in India, is also adding new geographical areas for domestic and industrial gas distribution. "We've added over 58 kms of gas pipeline around Surat district including areas such as Bardoli, Abrama, Sachin, Olpad etc. Also, we've opened 8 CNG stations during the year," said Sircar.
The company is now looking to add new areas in Bharuch district of Gujarat. "We are in the process to identify clusters around Bharuch district, where we can supply gas to domestic and industries together," he added.
It may be noted that in later this year, energy behemoth British Gas (BG) Group had announced to sell its 65 per cent stake in GGCL to GSPC Group's subsidiary GSPC Distribution Networks Ltd (GDNL) for a consideration of around Rs 2400 crore (at the company's share price of Rs 295 a share).
The transaction will take place soon and the deal will be closed in a few months.
GGCL shares closed at Rs 305.50 on Friday marginally up from its previous close on BSE.