The Hindu Business Line : Petronet steps up efforts to procure more LNG

New Delhi, July 20 The board of Petronet LNG Ltd on Monday is likely to consider the revised deal for liquefied natural gas (LNG) from Exxon Mobil’s interest in Australia’s Gorgon project.

Official sources told Business Line the company has been in talks to secure Exxon’s entire stake of 3.75 million tonnes per annum (mtpa) from the project.

Exxon’s share in the project has increased to 3.75 mtpa from 2.5 mtpa after project operator Chevron Corp announced increasing the project size to 15 mtpa.

To meet the increasing demand for clean fuel and with the natural gas supply crunch in the country, Petronet has been scouting for LNG from various sources. Petronet and Exxon have already frozen a draft agreement under which Petronet would buy Exxon’s share of LNG from the project for 25 years.

Chevron owns 50 per cent stake in Gorgon, while Exxon and Shell hold 25 per cent each. Petronet will have to give a final price quote to Exxon by July 31, sources said, adding that any decision on the deal could be expected by the last quarter of 2008.

Petronet plans to bring this LNG through its upcoming terminal at Kochi or the existing one at Dahej.

Another proposal

Another proposal which the board is expected to consider is that of securing an additional 3.5 mt of LNG from a source other than Gorgon or the existing contracts for Dahej/Kochi terminal. Currently, the company gets 5 mtpa from RasGas of Qatar under a long-term LNG deal which will increase to 7.5 mtpa from 2009.

Official sources declined to disclose the name of the source or the price. Indications are that Petronet will get LNG at a competitive price. The company is in talks with Algeria, Oman, Equator New Guinea (North of Nigeria), and Qatar for long-term contracts as it is increasing its capacity at the Dahej terminal to 10 mt by December 2008. The Dahej capacity is expandable to 12.5 mt from the existing 6.5 mt.

ADB not exiting

As regards reports of Asian Development Bank (ADB) exiting Petronet LNG by offloading its 5.2 per cent stake, sources said the bank is understood to have communicated to the public sector undertakings — ONGC, GAIL (India) Ltd, Indian Oil Corporation, and Bharat Petroleum Corporation — that it has decided against the move for the present.

The four PSUs own 12.5 per cent each in Petronet LNG. If the PSUs are allowed to increase their stake in Petronet LNG, the company would become a public-sector undertaking, thus changing the character of the company.

Interestingly, GAIL, which is yet to firm up long-term LNG contract for its Ratnagiri LNG project, has expressed keenness to buy ADB’s entire stake . When contacted, the GAIL Chairman and Managing Director, Mr U.D. Choubey, said he would not like to comment on the issue.

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