The Hindu Business Line : Petronet LNG resorts to distress sale of gas

THE public sector oil companies that have the rights to market the gas imported by Petronet LNG have been resorting to distress sale to urea manufacturers over the past few days.

This is an outcome of the fertiliser manufacturers' refusal to lift gas offered to them by Petronet since the latter demanded high prices.

This has become a losing proposition for Petronet with the gas shipment remaining stuck at Dahej port.

Since Petronet had chartered the LNG tanker at a time-charter hire rate of $68,900 a day, its losses increased each day the tanker remained berthed at the port.

With this, other routine charges were also being added, resulting in increased cost to the company.

Repeated efforts to contact Petronet officials proved futile. However, officials in a number of urea manufacturing companies confirmed to Business Line that they have been receiving regassified LNG (RLNG) imported by Petronet during the past few days at the same price at which they get the gas from the public sector gas suppliers.

This is a subsidised rate specially made available to the urea manufacturers in order to keep urea prices affordable for the farmers.

Earlier, Petronet had been demanding $4.87 per mmbtu (million metric British thermal unit) of gas within Gujarat and $4.93 outside the State.

But the urea manufacturers have actually been receiving gas supplies at prices between $2.6 and $3 per mmbtu, depending on the location of the units.

Senior officials in the fertiliser companies said: "We have been receiving RLNG from the public sector oil companies at the same subsidised price that they normally charge, $2.6-3 per unit. But this is a temporary measure the company has adopted to evacuate the HBJ pipeline. No agreement on the pricing has yet been reached."

Petronet LNG had inked a gas purchase agreement with Rasgas for buying five million metric tonnes per annum (mmtpa) of LNG on free-on-board (fob) basis for 25 years for its recently commissioned regassification terminal at Dahej.

The agreement has an in-built `take-or-pay' clause that forces Petronet to pay a penalty if it does not lift the promised quantity of gas.

Simultaneously, Petronet also has a similar clause in its agreement with the marketers following which the three public sector oil companies are bound to lift the gas imported by Petronet.

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