LNG from West Asia to feed Shell's Hazira plant

Royal Dutch Shell will be sourcing liquefied natural gas for its Hazira terminal in Gujarat from West Asia. A ship carrying LNG from the Gulf was likely to unload at the terminal by June-end, company executives said.

The terminal, in which France's Total has a 26 per cent equity, was originally designed to handle 5 million tonnes of LNG. But currently its capacity is 2.5 million tonnes.

The first LNG consignment was sourced from Australia's North-West Shelf project, in which Shell has a 22 per cent stake. A Shell-controlled tanker, the 136,000 cubic metre Gemmata, carried the first cargo.

Shell is currently selling LNG to only Gujarat State Petroleum Corporation (GSPC). It has a contract for supplying 0.7 million standard cubic metres per day of gas for 210 days, at a price of $3.70 per million British thermal unit (mbtu) to the GSPC.

The corporation executives told Business Standard that Shell's price was slightly higher than Petronet LNG Ltd's $3.66 per mbtu.

This is because the LNG brought by Shell is more expensive. So, it has to pay a higher Customs duty. Shell began supplying natural gas to the GSPC in April.

Shell is in talks with Essar Steel to develop a bulk terminal in Hazira for captive use. It plans to invest Rs 3,000 crore in bulk cargo and container terminal at the Hazira port.

Shell is in talks with Maersk, P&O Ports of Australia, Port of Singapore Authority (PSA) and Dubai Port International for the container terminal.

While Essar has been offered 50 per cent stake in the $100 million bulk cargo terminal, Shell is looking at 49 per cent equity partnership in the container terminal.

Shell is promoting Hazira as a merchant terminal. The company will be going in for flexible natural gas supply contracts for the terminal.

It did not follow the conventional model of sourcing LNG from a particular project on a long-term basis, and then tying up long-term sales contracts with Indian customers.

Gas shortfall

• The terminal, which was originally designed to handle 5 mt LNG, has a current capacity of 2.5 mt
• Shell's price is higher than Petronet LNG Ltd's selling price of $3.66 per mbtu. This is because the LNG brought by Shell is more expensive.
• Shell plans to invest Rs 3,000 crore in bulk cargo and container terminal at the Hazira port and for this it is in talks with Maersk, P&O Ports of Australia, Port of Singapore Authority (PSA) and Dubai Port International
• The company did not follow the conventional model of sourcing LNG from a particular project, and then tying up sales contracts with Indian customers