GSPC signs 500,000-tonne LNG deal with Total

Vol 14, PW 24 (02 Jun 11) Midstream & Downstream

Total has just won its largest ever LNG import deal in India.

GSPC managing director Tapan Ray signed an agreement on May 20 to import 500,000-tonnes of LNG from Total at the Hazira LNG terminal in Gujarat, where Total (26%) is a junior partner with Shell (74%). Till now Total has brought random spot LNG ‘commissioning cargoes’ to India from the Middle East or Sakhalin.

But under the May 20 deal, it has committed to supply nine ‘term’ LNG cargoes to GSPC at Hazira. Total’s first cargo for GSPC is scheduled to arrive towards the beginning of 2013, and the rest will follow in monthly intervals.

Still unclear is the price at which this deal was signed. “GSPC always buys the cheapest LNG,” boasts a senior GSPC source.

“So we’ve got the best possible deal. Total has a reputation for sourcing the cheapest LNG cargoes in the world.

This is the single-largest LNG deal signed by GSPC in 2011.” Some wildly speculate that GSPC’s deal could be “even better” than the nine-cargo contract it signed with Repsol-affiliate Stream in December 2009.

If true, this would be quite a coup for GSPC. Stream charged GSPC a price linked to the US-based Henry Hub benchmark plus $1.6/mmbtu ‘premium FOB’; plus $1/mmbtu ‘freight’; plus $0.60/mmbtu re-gasification charges and 5% ‘import duty’.

On May 25, the Henry Hub benchmark was trading at just $4.3/mmbtu. GSPC also signed a two-year deal with Russia’s Gazprom on January 11 this year for 300,000-tonnes of LNG.

“Spot LNG cargoes and the Gazprom deal will see GSPC through most of 2011,” we hear. “We’re still looking for more LNG for 2012 as we’ve only partially tied up supplies.

But our deal with Total takes care of 2013.” Total is one of the top three LNG suppliers in the world and is expected to supply ‘US reload’ and ‘US diverted’ cargoes to GSPC.