France offers LNG cargoes to Petronet-LNG

Vol 14, PW 12 (02 Dec 10) Midstream & Downstream

French conglomerate GDF SUEZ might soon be supplying medium-term LNG cargoes to Petronet-LNG at Dahej.

GDF SUEZ owns a 10% stake in Petronet-LNG, and is also the company’s ‘strategic partner’. Until now GDF has landed “less than 10” LNG cargoes at Dahej, we hear, but PETROWATCH learns it hopes to sell six LNG cargoes every year to Petronet-LNG for three years, beginning January 2011.

GDF sent a six-page ‘draft’ proposal to Petronet-LNG on November 14, outlining the broad terms of a potential Gas Sale and Purchase Agreement (GSPA) to senior directors at Petronet-LNG with an offer to sell the medium-term LNG cargoes at 10.3% of the Brent Crude benchmark plus $0.90/mmbtu. This price will remain constant for the entire contract, regardless of whether demand rises or falls during the summer and winter seasons.

GDF is also offering to deliver these cargoes at Dahej on the tenth day of every alternate month, using extra-large LNG carriers with up to 216,000-cubic metre capacity. In its proposal, GDF reserves the right to source LNG from anywhere it wants, as long as it meets the ‘quality specifications’ outlined in the proposal.

But it is likely to source the LNG from any of the liquefaction facilities where it has stakes: Egypt, Norway or Trinidad & Tobago. When contacted, GDF confirms India as a potential market for LNG sales but refuses to comment specifically on the November 14 proposal.

“We have a large portfolio,” says a company source, “and sell 17m t/y LNG worldwide.” A Petronet-LNG spokesperson likewise declined to comment on the GDF offer.

Yet our sources disclose Petronet-LNG has begun talking to potential R-LNG customers for the GDF deal. In October, GAIL surprised markets with its announcement of a three-year 24-cargo medium-term LNG deal with Japanese trader Marubeni, priced at 9.85% of the Brent benchmark plus $0.95/mmbtu for the first year of the contract.