One consumer price for LNG in offing  
1-Jan-1970


New Delhi
In what could mark the beginning of a uniform gas pricing policy, the petroleum ministry has initiated an exercise to have one consumer price for gas imported as LNG (liquefied natural gas).

This follows directions from the Cabinet secretariat to evolve a mechanism to average out the user price of LNG already been imported with the price of LNG to be imported under new medium- and long-term contracts. But short-term spot LNG imports will not be included in the scheme.

Confirming the move, petroleum secretary MS Srinivasan told FE that the ministry was checking out the legalities of the move since it would result in a marginally higher price for existing consumers in the power and fertiliser sectors. The same consumers will, however, benefit from a lower price for future purchases of LNG.

According to Srinivasan, this will help streamline the consumer price of gas, imported as LNG under different contracts. For instance,Petronet LNG Ltd (PLL) currently imports 5 mtpa of LNG at Dahej at a free-on-board (FOB) price of $2.53 per mmbtu. But if it procures an additional 1.25 mtpa at around $5.5-$6 per mmbtu, the average FOB price of PLL?s LNG will work out to about $3.54 per mmbtu, much lower than the prevailing LNG price in global markets.

PLL?s chairman & MD P Dasgupta said, ?You can?t have PLL selling a part of LNG to a set of consumers at a particular price and to others at a different price.?

Officials said this mechanism might be extended to cover gas procured from all sources, including domestic gas supplies.




Source: The Financial Express, October 24, 2006
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