Petronet-LNG continues talks with Qatar for LNG

Vol 9, PW 21 (09 Feb 06) Midstream & Downstream

Petronet-LNG is continuing talks with Qatar for the supply of LNG to its proposed 5m t/y import terminal at Kochi.

From 12th to 14th February, a top-level Petronet-LNG team will be in Qatar to take forward ongoing discussions with RasGas. Petronet-LNG wants an additional 7.5m t/y LNG from Qatar.

What has been the RasGas response Says an industry source: They said theyll talk about additional supplies only after Petronet-LNG meets all the Conditions Precedent for the Dahej expansion project. For this Petronet-LNG is on safe ground.

All these were met by the RasGas deadline of 31st December 2005. Qatar is not the only source that Petronet-LNG is talking to for Kochi.

Talks are also at an advanced stage with ExxonMobil for its entire share (2.5m t/y) of production from the Gorgon LNG project in Australia. In December and January a team of Petronet-LNG officials visited Exxon in Australia to continue talks.

A pricing formula has been agreed, we hear. The price will be partly fixed and partly linked to the Japanese Crude Cocktail basket.

Further details are unavailable but we are told that when plotted on a graph, it yields a S curve depending on variation in crude oil price. Freight costs from Australia to Kochi are likely to be 50 cents per mmbtu, unlike from Qatar where it is expected to be around 26 cents.

Petronet-LNG and Exxon have already had eight rounds of discussions and some predict they will sign a Sale Purchase Agreement within the next two to three months. First supplies from Gorgon (Exxon) are expected in 2009-10.

LNG from Exxons Gorgon share will be relatively rich but not as rich as from RasGas. LNG received by Petronet-LNG at Dahej from RasGas is 90% methane while that from Gorgon is likely to be 95% methane.

At Kochi, GAIL has commissioned a feasibility study for a facility to extract C2, C3 and C4 from LNG.