Another fertiliser company can't get long-term gas

Vol 10, PW 26 (03 May 07) Midstream & Downstream

You would think a fertiliser plant at Jagdishpur in Uttar Pradesh would not suffer gas shortages.

Think again! Despite its location at the end of the HBJ, India’s gas artery, Aditya Birla-owned Indo Gulf Fertilisers is the latest company to tell us it is freezing expansion plans because it can’t secure long-term gas commitments from suppliers, for either domestic gas or R-LNG. “Gas suppliers can’t promise us long term supplies,â€‌ the company tells us.

“So no decision has been taken on expansion of our plant.â€‌ PETROWATCH learns Indo Gulf is talking to GAIL for long-term R-LNG and domestic gas, with no luck.

“GAIL is yet to come back to us,â€‌ we hear. Ditto for Reliance.

“We have had a series of meetings with Reliance to buy its KG gas,â€‌ adds an Indo Gulf source. “But even with them it is the same story; they tell us they will let us know the gas price â€کafter some time’.

â€‌ Indo Gulf buys a mix of domestic gas and R-LNG for its Jagdishpur plant. In the financial year till 31st March 2007, Indo Gulf bought 680,000 cm/d APM gas from GAIL (against a contracted amount of 780,000 cm/d) for which it paid close to $3 per mmbtu.

GAIL also supplied close to 700,000 cm/d R-LNG to the plant at around $5 per mmbtu. In addition, Indo Gulf bought 300,000 cm/d gas supplied by GAIL from the Panna, Mukta and Tapti joint venture at around $5 per mmbtu.

From Bharat Petroleum, Indo Gulf bought 190,000 cm/d of 'spot' R-LNG at around $10-$11 per mmbtu. “This will be our gas requirement until a decision is taken about expansion or de-bottlenecking,â€‌ adds the company.

“Pricing and quantity is the main issue.â€‌ Indo Gulf nostalgically remembers when its plant began commercial operations 19 years ago using only APM gas from GAIL through the HBJ.

“GAIL is our preferred supplier,â€‌ we hear. “But BPCL is our preferred 'spot' R-LNG supplier.

â€‌ This financial year till 31st March 2008 Indo Gulf needs 2.08m cm/d. After April 2008, its gas requirement will marginally increase to 2.15m cm/d.