GAIL-Iran LNG deal to boost Petronet

In search of an alternative long-term source for liquefied natural gas (LNG) other than Qatar, GAIL India, one of the major stakeholders in Petronet LNG (PLL), has finalised a gas purchase pact with the National Iranian Oil Company (NIOC).

GAIL will buy 2.5 Million metric tonne per annum (MMTPA) of LNG from Iran. With this deal, PLL's plan for doubling capacity of its LNG terminal at Dahej in Gujarat, from existing 5 MMTPA to 10 MMTPA, has gained momentum as PLL has already signed agreement with RasGas of Qatar to source an additional 2.5 MMTPA of LNG apart from its current purchase of 5 MMTPA from the Qatar firm.

"The negotiation was going on for over last four months and finally we have closed to deal and decided to buy LNG from NIOC at a very attractive rate. The gas may be unloaded at Dahej terminal for regassification and then sold through GAIL's pipelines to prospective customers. As the agreement is for long-term supply from NIOC, supply of 10 MMTPA of LNG now has been ensured," A K Ray, executive director of GAIL, said here on Saturday.

Ray, who was in the City to attend 'Synergy for Energy,' an international workshop organised on energy conservation, also said with the expansion of PLL's present capacity and plans for setting up new LNG terminals elsewhere in the country, GAIL was also trying to work out sources for more LNG which can be regassified at PLL terminals and then sold as RLNG to various industries.

"We are looking to cater to the increasing number of gas-based power projects and as well as striking deals with LNG suppliers at a competitive price as natural gas demand is highly price sensitive, especially for power generation. By 2012, natural gas demand is expected to reach 90 MMSCMD at a delivered price of $ 4 per MMBTU which could almost double, if the delivered price settles close to $3 per MMBTU," said Ray.

According to him, in three to four years, around 1000 mw gas-based capacity is expected to come in various parts of India, including the upcoming projects such as National Thermal Power Corporation's 2300 mw power project at Kayamkulam, 1360 mw project at Dadri by Reliance Energy and 1000 mw power project at Bawana.

Ray also said LNG-selling companies including, PLL and Shell Hazira, are looking at sourcing gas at a cheaper price as with a delivered price of $ 4/MMBTU in 2002, there was demand for 40 MMSCMD of gas. This will increase to 67 MMSCMD in 2007 and is expected to rise to 90 MMSCMD in 2012.

Kochi plan approval on October 29

Petronet LNG will finalise its plan for setting up a 2.5 MMTPA LNG terminal at Kochi in its board meeting on October 29 in New Delhi.

Suresh Mathur, managing director, said in Ahmedabad on Saturday that as the issues with govermment of Kerala already been sorted out, there is no further confusion over setting up the project there and PLL can sell its total capacity of 2.5 MMTPA of RLNG to customers in the south even if National Thermal Power Corporation decides not to buy gas from it.

"PLL also has advanced in its plan to set up a LNG terminal at Mangalore but we are still in talks with ONGC as it may be one of the major stakeholders in the proposed project as it enjoys a close proximity to its own Mangalore Refinery and Petroleum," Mathur said.