IOC considers selling Iranian LNG outside India

Vol 9, PW 3 (18 May 05) Midstream & Downstream

Indian Oil does not plan to restrict itself to the Indian market for sale of its share of LNG from Iran.

Its also looking to sell LNG in other parts of the world, particularly in Asia. A window of opportunity exists for selling LNG to other major buyers in Asia like Japan, South Korea, Taiwan and China, we learn.

Based on market analysis carried out by CRISIL it is estimated that there will be a demand/supply gap of about 99m cm/d (about 25m t/y) by 2010 in these countries. This will grow further in subsequent years.

IOC wants its 4.5m t/y share of LNG from Iran to land at a regassification terminal at Ennore in the southern state of Tamil Nadu. Government permission for construction is in hand, and consultants Tractebel of Belgium has already begun work on a detailed feasibility report.

However, conventional wisdom suggests it is cheaper to land Iranian LNG on Indias west coast at Dahej, Hazira or Dabhol. IOC is not blind to this and agrees that some of its Iranian LNG can also be received at other existing or new regassification terminals in India.

Primarily though, IOC believes the potential domestic market for its LNG from Iran is in southern India. The markets in this region would face a supply deficit of about 24m cm/d by 2010 increasing further in later years.

IOC says it has already signed Heads of Agreements for the supply of more than 18m cm/d with several gas consumers in Tamil Nadu. However, it has not ruled out selling Iranian LNG to northern and western India also.

There is also a potential market for such LNG in the western and northern states where a part of LNG from this project could be sold, we learn. Gujarat State Petroleum has already shown interest to enter into agreement with us for the purchase of LNG from this project.