Torrent wants to import 1m t/y LNG on its own

Vol 19, PW 12 (25 Feb 16) Midstream & Downstream

Torrent Power is scouting the market for 1m t/y of LNG beginning 2017-18 to fuel its three gas-fired power stations in south Gujarat.

Until now Torrent has never imported cargoes entirely on its own. In the past it has brought in two 'parcel' cargoes, sharing one with GAIL and the other with Shell.

But now the Ahmedabad-based company is talking directly with leading LNG suppliers including Shell, RasGas, BG, and several Australian producers. "Torrent is talking to almost everybody in the market," says a LNG sector source.

"It wants the best deal and its timing couldn't be better." Torrent acted smartly when it signed a 20-year deal on October 20, 2015 with Petronet-LNG to bring cargoes in at Dahej on a 'tolling basis' or after paying a toll, thus taking advantage of falling LNG prices. "Possibly they want to bring in the initial 1m t/y as a pilot project," says another LNG industry source.

"They want to see how things go first before extending the deal." If things don't go well, Torrent can hawk its Dahej import slots to other companies at discounted rates to cut its losses. Torrent must pay Rs42/mmbtu in regasification charges to Petronet-LNG or Rs210cr/year ($31m).

Luckily the company, promoted by billionaire brothers Sudhir and Samir Mehta, doesn't have to worry about pipeline tariffs as it has laid a dedicated 24-inch diameter, 9-km R-LNG pipeline from Dahej to its 1200-MW DGEN station.