Qatar concern at slow progress over Dahej LNG

Vol 6, PW 20 (04 Dec 02) Midstream & Downstream

GAIL MIGHT be fretting about the high cost of RasGas LNG but Qatar is more concerned about Petronet-LNG's failure to meet several commercial and policy milestones crucial to the success of Dahej.

These concerns were communicated by RasGas to the oil ministry in October. Top of the list is Petronet-LNG's failure to sign a gas sales contract with offtakers: Bharat Petroleum, Indian Oil and GAIL.

Also of concern is that the offtakers have not been able to sign MoUs with customers for Dahej gas. Qatar was hoping that National Thermal Power Corporation would nominate Petronet-LNG for its gas supply needs.

Another of Qatar's concerns is that the government of India has yet to unveil a pricing policy to bring domestic gas prices on a par with the global price of a basket of fuel oils. "Duties and taxes on LNG and regassified LNG, particularly state taxes, are very high." Of particular concern is the 22% sales tax in Gujarat.

"This may make regassified LNG non-competitive in Gujarat. Steps to rationalise duties and taxes on LNG were required to be taken but no progress appears to have been made." Qatar feels that if these pending issues are not sorted out quickly, "there may be difficulties in successful implementation of the Dahej project." Particularly since multinational companies like Shell are in competition to Petronet-LNG in Gujarat and are trying their best to spread an impression that they will be able to supply cheaper LNG.

Responds the ministry: "A decision on gas pricing policy will be taken soon. It is government policy to bring domestic gas prices on a par with fuel oils.

As for duties and taxes on LNG, this is being discussed with the finance ministry and the states."