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Pratim Ranjan Bose

Kolkata, March 13 Despite reaching a wider understanding with Petronet LNG for third party access of PLL’s Dahej terminal, British Gas may have to wait a little longer for entering the LNG business in India.

While British Gas and Petronet officials were not available for comment, sources told Business Line that the global energy major was looking forward to bring spot LNG cargo to India as early as in April 2008.

However, as things stand now, the project has been hit by the capacity constraint of Dahej terminal. While the terminal capacity is due to be expanded in next couple of months, Petronet may be requiring some clarifications from the Union Ministry of Petroleum and Natural Gas for taking any advantage of the deal.

The imports would have particularly come to the aid of BG subsidiary Gujarat Gas Company Ltd (GGCL), which is engaged in city gas distribution (CGD) in Gujarat and is expecting a substantial drop in availability of natural gas beginning next fiscal.

Since the existing spot LNG prices in India are unviable for CGD business, the company was awaiting for LNG supplies from BG at a “threshold price” to ensure top line growth.

BG on its part was also trying to enter the LNG business in India for the last few years. The company previously imported LNG in India through third party access of Shell Hazira terminal. Though Shell had adequate capacity at Hazira, the arrangement between the companies did not last long.

As a change of strategy, BG this time initiated negotiations with PLL. It was successful to the extent that PLL had no apparent objection to the deal.

Apart from earning the re-gasification charges, the Indian major, which is slated to double the capacity of Dahej terminal between June-December 2008, was also interested in securing some volumes at a competitive price from BG.

According to sources, BG had also stumbled over the price hurdle to effect such an arrangement. LNG prices are shooting up all time high in the face of huge demand support from the Far East and the spiralling of crude price.

According to sources, as per the current estimates, the BG imports would not have come sufficiently cheap to GGCL.

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