The Hindu Business Line : Petronet in talks with Shell to use Hazira facilities

It can be called a marriage of convenience between Petronet LNG Ltd (PLL) and Royal Dutch Shell for import of liquefied natural gas (LNG). PLL has decided to hire one of the LNG transportation vessel chartered by Shell and is in advance talks with the Dutch company to bring LNG at its Hazira terminal.

Dry docking

Asked why PLL, which has two LNG vessels — Disha and Raahi — of 1,38,000 cubic metre capacity each would be using Shell chartered vessel, official sources said, the vessels need to go for dry docking, a necessary requirement. The company's vessel Raahi is going for dry-docking this year. In dry-docking, a ship is removed from the water to enable work to be performed on the exterior part of the ship below the waterline. The entire process takes about a month, he told Business Line.

This in effect would mean that the import of LNG from Ras Laffan Liquefied Natural Gas Co Ltd II could also come down, as it would impact small cargo, he explained.

Domestic demand

He added that PLL had taken this decision in order to meet the demands of the domestic fertiliser and power companies including Kribhco, NTPC and Essar. PLL has a 25-year contract to buy LNG from Ras Laffan Liquefied Natural Gas Co Ltd II. Through this contract, PLL currently imports five million tonne (mt) at its Dahej terminal and would start importing 2.5 mt more from 2009.

Re-gasification

While negotiations are on with Shell's Hazira LNG Private Ltd for using its LNG terminal at Hazira to import 1-1.25 mt of spot LNG, PLL is also speaking to Shell to re-gasify the product before returning it back to Petronet. One of the sources of natural gas is LNG, which is imported in liquid form and then re-gasified before use.

When contacted, Mr P. Dasgupta, Managing Director, PLL, who is currently in Algeria, said, "we are in talks with Shell." On why the company wants to use Shell's capacity when it has its own LNG terminal at Dahej, Mr Dasgupta said, "it is not the issue of either's capacity. The total capacity of terminals combined (Dahej and Hazira) is 10 million tonne per annum (MTPA) that can supply 36 million cubic metre per day (MCMD) of gas, which needs to be fully utilised."

On the issue of the costs to be incurred for using Shell's facilities, Mr Dasgupta declined to comment. Meanwhile, Shell refused to comment on the query whether PLL was in talks with it or not. The demand for natural gas in the country for 2007-08 is estimated at 179.27 MCMD, whereas the domestic production is estimated at 70.54 MCMD.