IOC to float spot cargo tender next month

Vol 18, PW 7 (20 Nov 14) Midstream & Downstream

IndianOil is expected to float it long-awaited limited tender next month (December) to source its first independent spot cargo by February 2015.

IOC has shortlisted three of seven companies who sent in EoIs following its notice issued in June this year to take a spot cargo at Dahej. IOC refuses to disclose the names of shortlisted companies but industry sources say it was talking to BG, RasGas, Petronet-LNG and Shell among others.

IOC needs 5m cm/d R-LNG for its refineries at Koyali in Gujarat, Panipat in Haryana and Mathura in Uttar Pradesh. “By sourcing our own cargoes, we want to set up a smooth gas supply chain for our refineries,” says an IOC source.

“Then we’ll supply R-LNG to other customers also.” IOC reckons it will save at least $0.25/mmbtu by importing its own cargoes.

Also it is confident of sourcing spot cargoes at no more than $10.5/mmbtu because of oversupply in the market due to sluggish demand from South Korea and a warm winter. “Spot prices are falling,” says an industry source.

“LNG traders who have been hoarding cargoes are selling them to cut losses.” By end-November, Petronet-LNG should bring in a Q-Max cargo for IOC under a one-year deal for 800,000 tonnes of LNG which began in April 2014.

Shell is bringing in a ‘parcel cargo’ of less than 25,000 cubic metres by end-November at Hazira.