Bechtel offers two gas scenarios for Gujarat

Vol 4, PW 19 (25 Oct 00) Midstream & Downstream

Uncertainty over the viability of Gujarat's two proposed private sector LNG terminals has forced consultants Bechtel to examine two possible scenarios for the construction of the state's upcoming gas grid.

Interestingly, both scenarios give a resounding vote of confidence to the 5m tonnes a year (t/y) terminal of Petronet-LNG at Dahej by implicitly assuming that it will emerge. Details of the two scenarios are contained in an 'Executive Summary' of a Bechtel report prepared last month for the Gujarat State Petroleum Corporation - and obtained by Petrowatch.

"Two alternative supply scenarios were investigated; both envisage gas being supplied from the planned Petronet LNG terminal at Dahej," reads the Bechtel note, "'Scenario A' envisages additional gas from a proposed LNG terminal at Hazira; 'Scenario B' assumes that gas is supplied from the planned Pipavav LNG project via a sub sea pipeline to Hazira." Unsurprisingly, the report concludes that capital expenditure for implementation of 'Scenario B' ($745m) would be more expensive than CAPEX for 'Scenario A' ($605m). Bechtel adds that the operating expenditure of both scenarios is $11.8m and $9.7m respectively.

"When comparing the results of Scenario 'A' with Scenario 'B', it is clear that the higher capital expenditure required (due to the addition of a line from Pipavav to Hazira) to implement 'Scenario B' leads to higher transportation tariffs - close to 30% higher on average," adds the summary. How the difference in CAPEX between Scenario A and B will affect transportation tariffs on the gas grid -30% +30% Pre-tax and pre-financing (for 10% real IRR) Scenario A ($/Mcm) 3.7 6.3 Scenario B ($Mcm) 4.6 8.0 Post-tax and post-financing (for 10% real IRR) Scenario A ($/Mcm) 5.0 8.9 Scenario B ($Mcm) 6.5 11.4