Petronet LNG signs contract with RasGas

08-08-06 Petronet LNG Ltd. (PLL), India?s largest liquefied natural gas importer, has signed a side letter agreement on August 3, 2006, with Qatar oil company RasGas. The contract is one of the biggest among global LNG supplies.
PLL will import an additional 2.5 mm tpy of LNG from RasGas, amending the existing Sales and Purchase Agreement (SPA) between the two countries.

The original SPA was for 7.5 mm tpy and the first part of the agreement -- for 5 mm tpy -- was implemented in 2004. The additional volumes are expected to start flowing from July-September quarter of 2009, PLL, company managing director and CEO P. Dasgupta stated.
This agreement is viewed to complete a 7.5 mm tpy sales and purchase agreement signed in 1999, Ras Laffan Liquefied Natural Gas Company (II) (RasGas-II) stated.

LNG from Qatar will be regasified at Petronet LNG's Dahej plant in Gujarat, which has a surplus capacity to process about 2 mm ton of additional volumes over and above the current imports of 5 mm ton, according to sources.
In a view to meet the increasing natural gas demands, India has been seeking an additional 5 tpy for its two re-gasification terminals in Dahej (Gujarat) and Kochi (Kerala). The Dahej terminal is already connected to India?s largest pipeline -- the Hazeera-Bijapur-Jagdishpur (HBJ), owned by Gas Authority of India (GAIL) as well as the Dahej-Vijayapur pipeline. These two pipelines carry the Qatari gas from the Dahej terminal to six Indian states -- Gujarat, Madhya Pradesh, Uttar Pradesh, Rajasthan, Haryana and Delhi.

The Ministry of Petroleum and Natural Gas estimates that 20 % of India?s energy needs will be met through natural gas by 2025 from the present 8 %. The country?s annual demand for natural gas in 2020 will be between 80-90 tpy, the study found.
RasGas and Petronet are also currently negotiating the swapping of equity between them. Under the terms of understanding, RasGas and India?s state-owned Oil & Natural Gas Corporation (ONGC) are expected to swap 5 % equity stake with the Qatari energy major taking a stake in Petronet LNG and ONGC investing in a RasGas liquefaction project in Qatar. ONGC is Petronet's promoter.

Meanwhile, a high level team of RasGas and the petroleum ministry is held to arrive at a price at which 2.5 mm ton of Liquefied Natural Gas (LNG) will be annually supplied to the now-closed Dabhol project. RasGas is prepared to supply LNG from December for at least two years for the project, which is possessed by Ratnagiri Gas and Power (RGPPL). However, in view of non-availability of pipelines, gas could be made available only from April next year.
The ensuing discussion is believed to revolve around the LNG price issue. The ministry hopes a final decision would be arrived at the proposed meeting.

Ras Laffan Liquefied Natural Gas Company (II) is a joint venture company established in 2001 by state-owned Qatar Petroleum and ExxonMobil Ras Gas, an affiliate of ExxonMobil, to produce LNG and related products from a designated area within the northfield.

Source:, New Delhi, August 25, 2006
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