Petronet ties up supplies for Ratnagiri Gas project

Petronet LNG Ltd (PLL), the biggest liquefied natural gas (LNG) importer of the country, has successfully tied-up gas for Ratnagiri Gas and Power Project Ltd (RGPPL), the erstwhile Dabhol project.

The gas is likely to be available to the company at a price of $5.83 per million British thermal unit (mmBtu,) whereas the current spot rates for LNG are between $8 and $9 per mmBtu.

Petronet had last month firmed up short and medium-term contracts from four sources - Africa and West Asia - to meet the requirements of Ratnagiri Gas. Sources told Business Line that Petronet has tied up supplies from Algeria, Oman, Qatar and Egypt for the purpose. The company would be sourcing in the range of 1.5 million tonne (mt) of 24 cargoes from these four suppliers, which in aggregate would be adequate in meeting the demand of Ratnagiri Gas. The requirement for the power plant at Ratnagiri, which is currently run on naphtha, would be 2.1 mtpa. Petronet was eyeing over 2.25 mt of LNG for delivery starting April-May to supply to Ratnagiri Gas. The LNG sourcing was tied up during the recent visit of the Petronet Managing Director, Mr P. Dasgupta, to Africa and West Asia, to purchase LNG amid a shortage caused by soaring demand.

These are spot cargoes, sources said. While declining to disclose the price at which the LNG would be sourced from these four countries, sources said that the average pooled price would be $5.83 mmBtu for the gas delivered at Ratnagiri.

Price mechanism

Elaborating on the average pooled price mechanism, sources said, the Petroleum Ministry has suggested it and it is the weighted average of long and short-term contracts for deriving the price for the supply at Ratnagiri.

Petronet is looking at sourcing from middle May, by when the Dahej-Uran Pipeline (DUPL) would be extended to Ratnagiri.

The total length of the pipeline is 474 km with the capacity of transporting12 mmscmd of gas. Meanwhile, Petronet is also on the verge of firming up a tie-up with Shell for using its Hazira LNG facility.

The LNG importer has exhausted its five-million-tonne capacity at Dahej, and is looking at leasing Shell's 2.5-mtpa terminal at Hazira.

While Petronet is looking at increasing its LNG terminal capacity, other LNG terminals under consideration are Dabhol LNG terminal (1.2 mtpa in 2007-08) and LNG terminals at Kochi and Mangalore.

Source: Business Line, March 27, 2007
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