Torrent prepares R-LNG tender to offset PMT shortfall

Vol 11, PW 17 (10 Jan 08) Midstream & Downstream

Torrent Power is making contingency plans to commission the first 387-MW block of its 1100-MW mega power plant using R-LNG, amid continuing uncertainty over future availability of domestic gas from the Panna, Mukta and Tapti fields or Reliance’s D6 field.

PETROWATCH learns Torrent has tentatively pencilled in late-March this year for a tender to secure a total volume of 324m cubic metres spot R-LNG over three to five months, with supplies beginning April. From April, Torrent wants to begin testing the first 387-MW block of its combined cycle power plant located in the Akhakhol village of Surat district in Gujarat and hopes to commission the first block by June this year and the remaining two blocks of 387-MW each by December this year.

Like other gas consumers in India, Torrent hopes R-LNG prices will have softened considerably by the onset of summer in April. “During winter prices are soaring like anything,â€‌ we hear.

“Wherever you go for a quote they tell you $14-$15 per mmbtu but once the summer sets in prices would be more reasonable.â€‌ More â€کreasonable’ yes, but still nowhere near the price of hugely cheaper domestic gas from Reliance at D6 or the BG-led consortium at PMT.

“If you consider a spot price of $8 to $9 for R-LNG, which it would be in the summer,â€‌ says an analyst, “this would convert to a variable cost of between Rs2.5 to Rs2.7 and electricity produced would be around Rs4 per unit. From PMT gas, the variable cost of power would be Rs1.5 and electricity produced around Rs2.3 to Rs2.4 per, much cheaper.

â€‌ Is Gujarat ready to pay more for its electricity “People already buy electricity produced from naphtha,â€‌ adds a source. “Why can’t they buy electricity produced from spot R-LNG Torrent has no choice.

â€‌ Until now Torrent was banking on 4.7m cm/d of domestic gas to fire its proposed 1100-MW power plant: 900,000 cm/d from ONGC’s allocation of PMT production and 3.8m cm/d promised by Reliance from D6. For different reasons, both these supply sources are now in serious doubt.