Petronet's Australian gas pact by December

A delay of six months is expected before Petronet LNG Ltd (PLL) formalises its pact for sourcing 2.5 million tonne (mt) of liquefied natural gas (LNG) from Australia's Gorgon gas project for its upcoming LNG terminal at Kochi.

PLL, which was earlier expecting to firm up its long-term LNG contract from the project by June this year, is now looking to ink the pact by December.

A senior PLL official told Business Line that the delay was mainly due to the environmental snag suffered by the project, leading to change in development plans of the fields. In December last year, the project overcame the environmental hurdle. The Gorgon project is operated by the Australian subsidiary of Chevron in a joint venture with Australian subsidiaries of ExxonMobil and Shell.

The official said the draft agreements were being exchanged. "Almost eight agreements are likely to be signed, which would include those on security, guarantee, besides the one on supply. The supply of gas earlier was expected by 2011, but now it is expected by 2012," he said.

The official declined to comment on the price of LNG. Indications are that it would be an affordable price acceptable to all concerned. Though the gas supply is expected from 2012, having a long-term commitment in place is crucial for meeting future demands.

Talks With Others

On whether this delay in long-term contract from Australia would have any adverse impact on PLL's plans, he stated that the company was in talks with various other potential suppliers including Malaysia, Oman, Qatar, Abu Dhabi, and Algeria for import of LNG since the requirement is far more than the 2.5 mt expected from that country. Besides, spot cargo market is good, hence delay in long-term contract would not have much negative impact, he added.

Chevron is the operator and the largest stakeholder in the Gorgon gas project, with 50 per cent, while ExxonMobil and Shell each hold a 25 per cent stake. Chevron has estimated the greater Gorgon area to contain an estimated gas resource in excess of 40 trillion cubic feet. Of the 10-mt-production capacity, Chevron's stake would be about 5 mt, with Shell and Exxon holding 2.5 mt each. PLL is in talks with Exxon for sourcing its share from the project.

India currently has a contract to buy 7.5 mt of LNG a year from Qatar. However, the current supply from Qatar is only 5 mt. PLL has a 25-year contract to buy LNG from Ras Laffan Liquefied Natural Gas Co Ltd II. Through this contract, PLL currently imports mt at its Dahej terminal and will start importing 2.5 mt more from 2009.

The demand for natural gas for 2007-08 in the country has been estimated at 179.17 million standard cubic metres per day (mscmd), which is expected to go up to 225.52 mscmd by 2009-10. The current consumption level stands at 95 mscmd.

Source: Business Line, April 7, 2007
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