LNG importers laugh at IFFCO demand for $3 gas

Vol 7, PW 2 (09 Apr 03) People & Policy

SHELL AND Petronet-LNG are competitors for the Indian LNG market but on one issue they are united: opposition to IFFCO managing director Awasthi's demand for LNG at $3 per mmbtu.

"Awasthi has been saying this for quite some time," reveals a source. "Somebody should ask him how he has arrived at this magic figure.

What is the cost of the naphtha that he is using now Is this price of $3 per mmbtu for a new or old fertiliser plant" In industry circles Awasthi is credited with the now defunct idea that the fertiliser industry should set up an LNG import terminal exclusively for itself. "Why did he give up the idea if he knew he could get LNG at $3 per mmbtu" A source with a Petronet-LNG offtaker was more scathing.

"Somebody woke up in the morning with a $3 rate in his mind and now the entire sector is stuck with it. Aren't they aware that soon India will exhaust its domestic gas supplies Petronet-LNG is offering them the next source.

Let them give us the comparative heat equivalent price for the fuel they burn now and they will know how cheap our gas will be in comparison." He adds: "These are the same fertiliser companies that have signed a contract with Oman to import fertiliser at $115 per tonne. Why can't they pay us the same price on import parity I can match the landed price of importer fertiliser in my LNG rate." Clearly, LNG importers believe IFFCO's demand is unreasonable and amounts to asking for free fuel.

"Everybody wants free fuel. This is not possible.

We are trying to explain to the power and fertiliser companies that Petronet-LNG is offering a cheaper and alternative fuel. Pay us the reasonable and affordable rate.

We are not going to overcharge you."