Gujarat signs LNG supply deal with Royal Shell

The Gujarat government has signed a pact with Royal Dutch/Shell for a long-term supply of 2 million tonne LNG. The agreement signed today will come into effect from 2010 for next 15 to 20 years.

Linda Cook, executive director, Shell Gas and Power, said no price has been fixed for the supply. "The price will be in parity with global prices," she added.

About the agreement, chief minister Narendra Modi said energy security was the name of the game today.

"We believe in long-term security of energy for the state and the pact with Shell would ensure it for us in the long run," said Modi. Gujarat State Petroleum Corporation (GSPC), a Gujarat-owned company, signed the pact on behalf of the state.

Shell and GSPC are also exploring the possibility of importing LNG to fulfil the short-term requirement of Gujarat industry. GSPC chairman Balwant Singh said the deal for a short-term supply was being discussed and may materialise soon.

"All that we are insisting for is back to back and continuous supply LNG from Shell. Unless we have some kind of assurance on continuous supply of LNG it makes difficult to get commitment from customers," said Singh.

"If we get one or two cargo and than with change in prices if supply discontinues it would land up the buyers in big trouble," he added.

About the supply from Shell for the proposed long-term LNG deal, he said that the Shell is expected to supply LNG from its new projects coming up in Pacific basin and Atlantic basin both.

Singh said Shell has indicated that the Middle East region projects may also be considered by Shell for LNG supply for the long term deal with GSPC.

While Shell has LNG business interests in Oman and Qatar in the Middle East region Total, a 26 per cent stake holder in Shell LNG Hazira project may contribute some from its Yemen liquefaction project. Total has LNG liquefaction interest in Yemen. For the long term supply to GSPC, Shell may also rope in Total said Singh.