Hopes of cheap LNG from Qatar goes up in air

India's hopes of getting cheap liquefied natural gas (LNG) suffered a setback today when Qatar's second deputy premier and minister of energy, Abdullah Bin Hamad Al-Attiyah, said the costs of production and liquification have gone up substantially.

Attiyah, who is also the chairman and managing director of Qatar Petroleum, said while longer trains (liquification plants) have helped in reducing cost to a large extent, the input cost, especially of steel, have risen sharply.

On queries by ONGC and Petronet LNG Ltd (PLL) if there was a possibility of cheaper LNG, Chevron Global Gas President John Gass said although technology would continue to drive the prices down, gas was going to go where there was highest net back price.

Qatar's RasGas Company Ltd, which has signed a long-term pact with PLL for supply of 7.5 million tonne LNG, had last evening conveyed that any fresh supplies would be at international rates.

Briefing reporters, Alexander Dodds, managing director, RasGas, said, "Anything that comes over and above the long-terms agreements has to be negotiated."

Dodds said RasGas tied up all its spare capacity, so anything outside it would come only if the facilities reached their peak. There was enough demand for such spare cargo for which countries would have to bid, he added. "Ten years ago, LNG business revolved around Asian buyers but now the United States and Europe too offer opportunities," he said.

RasGas will have a capacity of 36.6 million tonne by October 2009 from its seven LNG trains. Its fourth train with a capacity of 4.7 mt will be completed shortly.

In his address at the 18th World Petroleum Congress, Chevron's Gass said the three fundamental challenges facing the gas industry were cost competitiveness, cycle time and complexity. He said while cost needed to be managed aggressively, the numerous up coming projects had put pressure on cost.

International Gas Union President George Verberg said LNG was taking the first place within the natural gas domain with more than 7 per cent growth. He said 250 liquifaction and regassification facilities were likely to be in place by 2030.

Gass also said the global demand for energy would grow at 50 per cent over the next 20 years while that for natural gas would grow 70 per cent and therefore, there was need to build better infrastructure.

(The correspondent's visit was sponsored by ONGC)