Showdown in Delhi between RasGas and GAIL

Vol 3, PW 22 (24 Nov 99) Midstream & Downstream

It was only a matter of time before Qatars Ras Laffan Liquefied Natural Gas Company Limited (RasGas) began to get worried at the antics of Indias Gas Authority of India (GAIL).

That time has now come. Petrowatch learns a delegation from RasGas was in Delhi in the week beginning Monday (15th November) to find out exactly where GAILs loyalty lies: with Petronet-LNG or its rivals British Gas and Total.

This report learns a series of high-level one to one talks were held between the RasGas delegation and senior officials at state-owned GAIL. There was a lot of plain-talking, a source tells Petrowatch.

Directors from Petronet-LNG attended some of the meetings. Anxiety at RasGas stems from a perception that GAIL is not committed to the Petronet-LNG consortium, where it holds a 12.5% equity stake alongside ONGC, IOC, Bharat Petroleum and IOC.

On 31st July this year, Petronet-LNG signed a 25-year Sales Purchase Agreement (SPA) with RasGas for the import of 7.5m tonnes a year of LNG via Dahej (5m t/y) and Cochi (2.5m t/y). When RasGas signed the SPA they thought GAIL was firmly behind it, adds the source.

The perception of GAILs disloyalty has been enhanced by the companys widely reported joint venture to distribute regassified LNG imported by Total through the Hazira-Bijaipur-Jagdishpur (HBJ) pipeline, and its on-off talks with British Gas, promoters of the Pipavav LNG project, a direct rival to Petronet-LNGs project at Dahej. These people (RasGas) read the newspapers and they dont like what they are reading, this report is told.

It is unclear what reassurances GAIL officials have given RasGas. What is clear is that if RasGas is not satisfied the matter will be taken up at an inter-governmental level.

Officials at Petronet-LNG are advising RasGas to tone down its anger in case it backfires.