PETRONET-LNG: A MONOPOLY IN THE WINGS?

Vol 3, PW 2 (17 Feb 99) Midstream & Downstream
     

If its succeeds, it will have implications for all potential importers of LNG into India.

Petronet-LNG, the government designated importer of LNG, has begun to lobby for a restriction of LNG imports. "Imports of LNG should be shifted from the Open General License (OGL) category to the Restricted List", a source at Petronet LNG tells a correspondent for Petrowatch.

The difference is crucial: items on the Restricted Import list require an import license from the Directorate General of Foreign Trade (DGFT), while Items on the OGL list are procured via international tender. Petronet LNG is angry at what it sees as "indiscriminate" approvals by the Foreign Investment Promotion Board (FIPB) for LNG import terminals across India, in particular in Gujarat.

Here, as many as five projects have been approved: - Dahej (Petronet-LNG); Pipavav (British Gas); Hazira (Shell); Maroli (Unocal); Jamangar (Reliance). "There is total confusion in the minds of the consumers", adds the source, who complains that consumers in gas-based power, fertiliser and petrochemical industries are unwilling to commit themselves to long term purchase agreements because they do not know which projects will survive the competition.

"There is nothing binding in the MOUs we are signing now", said one purchaser, "We will sign the purchase agreement with whoever makes the cheapest gas available first". Petronet-LNGs answer to such comments is to lobby the government to restrict the import of LNG to government approved agencies only.

So much for the company that prides itself on its free market credentials!