Petronet gets on board to supply LNG to Dabhol

Peeved at the slow progress in sourcing of fuel for restarting the beleaguered Dabhol power plant, the government has roped in Petronet LNG to scout for liquefied natural gas (LNG) to fire up the 2,184 mw plant.

"GAIL had been unsuccessful in getting LNG for restarting the plant by June 2006. So it was decided to get Petronet on board the LNG sourcing committee," said a top government official.

More than five months after Dabhol's previous owners settled their claims with Indian authorities, Dabhol plant's present owner Ratnagiri Gas and Power (jointly owned by GAIL and National Thermal Power Corporation) has not been able to begin work to finish the plant, whose 740 mw phase-I was shut four years ago following a payment dispute. The 2.5 million tonne a year LNG terminal is only 70 per cent complete.

General Electric and Bechtel, the power plant's earlier contractors, had agreed to help GAIL-NTPC complete the project but no contracts have been signed as LNG supply has not yet been tied up, the official said. Petronet has been roped in to expedite the whole thing.

Petronet would talk to Qatar for LNG for the Dabhol plant while it will take GAIL along for negotiations with Oman and Abu Dhabi for the fuel.

"It will take at least 9 months from the date of award of contracts to finish (work on) the 1,444 mw phase-II and the LNG terminal. Since the terminal will not be ready, the plant will have to be run on naphtha if it is to restarted in June-July," the official said.

The official said LNG suppliers in Australia, Malaysia, Qatar, Oman and UAE are quoting a price of about $7 per million British thermal unit (mbtu) for the gas required to fire the plant. The electricity generated at this price would be more than Rs 3 per unit.

Rasgas of Qatar, which is being courted by Petronet for supplies for the phase-I, has offered a price of $7.5 per mbtu.

North West Shelf (NWS) of Australia quoted a price of about $7 per mbtu for supply of 0.5 million tonne of LNG during 2006-07 and 2.3 million tonne per annum from 2008 onwards.

Malaysia LNG offered 0.75 million tonne of LNG per annum from Egypt at an ex-ship price of $7-8 per mbtu. Oman LNG and Adgas of UAE, the original LNG suppliers to the Dabhol project, are also quoting a similar price, sources said.

Oman LNG has indicated availability of 0.6-0.8 million tonne LNG in 2006, 1.0-1.2 million tonne for 2007 and 1.6-1.8 million tonne per annum from 2008 onwards. Adgas has offered 0.7 to 1.3 million tonne LNG per annum from 2006 onwards.

Ratnagiri Gas needs 0.64 million tonne per annum of LNG in 2006, which would go upto 2.83 mmtpa in 2007 and 5 mmtpa from 2008 onwards.

The power plant (740 mw phase-I and 1,444 mw phase-II requires 2.1 mmtpa and the balance 2.9 mmtpa would be used for merchant sale, sources said.

The official said Qatar has indicated an availability of five spot cargoes equivalent to 0.3 mmtpa in 2006 and potentially 0.75 mmtpa in 2007 and 2008 but negotiations are struck at price of gas.