Business Daily from THE HINDU group of publications
Thursday, Jan 01, 2009
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Business Daily from THE HINDU group of publications Thursday, Jan 01, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Outlook Logistics - Shipping/Ports Industry & Economy - Petroleum Shell plans to bring spot LNG cargo to Hazira in Jan Pratim Ranjan Bose Kolkata, Dec. 31 After a gap of nearly three months, Shell is planning to bring a spot LNG cargo at its Hazira (Gujarat) terminal in January, according to sources. The last time the terminal handled a cargo was in October, as demand for spot LNG evaporated due to meltdown in naphtha prices. Naphtha is used as an alternative to gas. When contacted Shell’s official sources in India neither denied nor confirmed the information. “Such issues are of commercial and business interests. We neither confirm nor deny this information,” a Shell official told Business Line. Sources, however, say that the company is planning to bring the cargo to take advantage of an anticipated shutdown of Petronet LNG terminal at Dahej (Gujarat) due to slated commissioning of the capacity expansion project. Post-commissioning Petronet’s terminal capacity will double from 5 million tonnes to 10 million tonnes per annum (mtpa). Efforts to contact Petronet officials for comments in this regard were not successful. According to sources, the planned Shell cargo will sell LNG at approximately $10/mBtu (million British thermal unit) ex-ship closer to the existing conversion cost of naphtha at $9/mBtu, down from $22/mBtu in September. Spot LNG was selling at around $18/mBtu in September. The plan, however, may face a setback in case the PSU refiners reduce naphtha prices substantially next month as it happened previously. Sources say that drastic cut in naphtha prices by the refining sector and a sudden cancellation of orders forced Shell to return two cargoes since October. Weak demandShell is the primary supplier of spot LNG in India. The company had expanded the terminal capacity from 2.5 mtpa to 3.5 mtpa earlier this year to keep pace with the phenomenal demand growth for LNG requiring unloading of up to four cargoes a month till commodity prices started melting down sharply since September so much so that the company took considerable time to clear the October cargo. Impact on GSPLThe near wipe out of the spot LNG market has not only impacted Shell. Sources say that Gujarat State Petronet (GSPL) – a gas transporter having largest pipeline network in Gujarat – witnessed a drop in volumes during the October-December quarter. Sources, however, point that the company may cover up the loss in volumes once Reliance’s KG asset comes into production as a part of the produce is expected to be transported through GSPL. Hazira Port to build $500-m multi-cargo terminal More Stories on : Outlook | Shipping/Ports | Petroleum
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