The Hindu Business Line : Fertiliser cos join hands to talk terms with Petronet LNG

LEADING fertiliser companies from the western part of the country have formed an informal group to bargain for gas at reasonable rates from Petronet LNG Ltd.

Officials of fertiliser companies including IFFCO, Kribhco, RCF Ltd and Shriram Fertilizers and Chemicals Ltd had met the officials of Petronet LNG and Gail (India) Ltd recently to discuss the terms of gas purchase from Petronet's upcoming five-million-tonne Dahej LNG terminal.

"This was the first of a series of meetings to be held for discussing the terms of gas purchase," said an industry source.

"They (Gail and PLL) have been speaking of a price of a little more than $4 per mbtu (million British thermal units). We (fertiliser companies) are saying we want gas at $3 per mbtu," he said.

The idea of "bargaining for a reasonable price" has been mooted by the members of the Fertiliser Association of India (FAI), which includes almost all the leading fertiliser players.

"We plan to form a core group comprising the FAI members to represent players who are in negotiations with oil companies," said a senior official from a public sector fertiliser company who did not want to be named.

Western India has the highest concentration of fertiliser and chemical companies. Most of these use gas or naphtha as feedstock. And almost all face problems of inadequate feedstock supplies.

On one hand, companies such as Rashtriya Chemicals and Fertilizers Ltd and IFFCO have been complaining of inadequate gas supplies for years and have been forced to use naphtha instead. On the other, Shriram Fertilizers is looking at switching to gas as feedstock.

Some of the companies have also begun negotiating with Shell for buying LNG from its Hazira terminal, which is scheduled for completion by the middle of next year.

Gas imported at Petronet LNG's Dahej terminal in Gujarat would be regassified and transported to the North via the existing Hazira-Bijapur-Jagdishpur or HBJ pipeline, passing through Rajasthan and Madhya Pradesh.

Petronet's promoter Gail India has also announced plans for a national gas grid that will extend supplies to units in Maharashtra through the Hazira-Uran pipeline.

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