Qatar will supply LNG for Dabhol

Qatar has officially committed to supply 1.2 million tonnes per annum of LNG (liquefied natural gas) to fire the Dabhol power plant in Maharashtra, but differences persist over the price. The commitment was outlined by Qatar?s second deputy prime minister and minister of energy and industry Abdullah bin Hamad Al Attiyah during a meeting with PM Manmohan Singh on Friday.

Attiyah called on the PM accompanied by oil minister Murli Deora. As per the arrangement, Petronet LNG ? which has been contracted by Ratnagiri Gas and Power, the new owner of Dabhol plant ? will import 1.25 mmtpa of LNG at its Dahej terminal in Gujarat and supply it to the power plant through the Dahej-Uran pipeline.

However, the two sides have not been able to agree on the price of gas. While Ras-Gas marginally lowered its earlier offer price of about $10 per million Btu (British thermal unit), the Indian firm was willing to pay no more than $5.5 per mBtu. ?They are still insisting on a price of $7-8 per mBtu,? an official said.

He added that further discussions on price would continue on Saturday and expressed hope that RasGas could be persuaded to agree for a price of $5.5 per mBtu. This would translate into a delivered cost of $7.3 per mBtu. At $8 per mBtu burner-tip price, the variable fuel cost comes to Rs 2.68 per unit. Together with the fixed cost of Re 1 per unit, the generation cost would be Rs 3.68 per unit.

The Dahej terminal receives 5 million tonnes per annum of LNG from RasGas under a separate long-term contract. The terminal has 1.25 million tonnes of spare capacity that would be utilised for imports for Dabhol. LNG will be imported at Dahej as the 5 million tonnes per annum import facility adjacent to Dabhol plant, though to be fully completed by March 2007, cannot be operationalised without a breakwater.

After the construction of the breakwater by June 2009, GAIL, which is an equal partner with NTPC in RGPPL, will arrange for long-term LNG supplies. GAIL has approached LNG suppliers in Australia, Malaysia, Indonesia, Abu Dhabi, Oman, Qatar, Egypt and Algeria for tying up supply from 2009 onward. No commitment has so far been received. RGPPL plans to operationalise two of the three 740 MW units of the plant by March-April. Unit-II was restarted this month on naphtha. It will generate electricity using naphtha as feedstock till March 2007.

Source: The Times of India, New Delhi
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