Hope for Dabhol: Qatar?s RasGas may cut LNG price

THE fuel crisis that has hit the Dabhol power project appears to be fading as Qatar has agreed to supply 1.25 million tonne per annum (MMTPA) short-term supply of liquefied natural gas (LNG) to the project at a negotiated price. It is understood that differences between two countries over price has narrowed as RasGas has lowered its offer price to around $7.5 per million British thermal unit (mBtu) from earlier quoted figure of about $12/mBtu. India is willing to pay not more than $5.5/mBtu.

Sources in government said that ?negotiations are on to further narrow the gap.? LNG will be supplied to Ratnagiri Gas and Power Project through Petronet LNG Ltd.

?RasGas has agreed in principle to supply 1.25 mmtpa of LNG from March 2007 to mid 2009,? an official said after Qatar?s Second Deputy Prime Minister and Ministry of Energy and Industry Abdulla Bin Hamad Al-Attiyah called on Prime Minister Manmohan Singh on Friday. In October, the empower group of ministers on Dabhol had been informed that Dabhol plant will get 1.2 million tonnes of LNG in March 2007, and an additional 0.9 million tonnes of LNG in June.
Qatar has also agreed to supply additional 2.5 MMTPA of LNG to India from June 2009.

It is expected that Qatar may offer a lower price for its LNG due to softening of global crude prices. Experts say the latest price offer by RasGas (around $7.5/mmBtu) is higher than the Henry Hub net back price of $6.40 per mmBtu. The Henry Hub netback price is a discounted price pegged to the international gas index Henry Hub.

Source: The Economic Times, New Delhi
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