Sabarmati Gas latest to depend solely on R-LNG

Vol 15, PW 16 (23 Feb 12) Midstream & Downstream

Sabarmati Gas is the latest company to tell us it has become totally dependent on R-LNG since its D6 gas supplies were abruptly cut last September.

Sabarmati, a joint venture between state-owned Bharat Petroleum and GSPC, is using only R-LNG to fuel its expansion in the north Gujarat districts of Gandhinagar, Mehsana and Sabarkantha. Two of India’s largest CGD operators, GSPC Gas and Adani Gas, likewise depend solely on R-LNG and it’s a similar story for the country’s only co-operative CGD operator Charotar Gas.

Sabarmati was receiving around 77,000cm/d of D6 gas at $4.20/mmbtu until September 21, 2011, when supplies were cut. “R-LNG is the only option available,” says a company source.

He adds Sabarmati is receiving 875,000cm/d of R-LNG, of which 400,000 cm/d is from Dahej. On February 8, Sabarmati directors met at its fancy new office in Gandhinagar’s sector 21 to review a draft business development report for 2012-13.

“Everybody concluded it was imperative to tie up additional R-LNG supplies irrespective of price,” we hear. This is because gas demand in north Gujarat is likely to increase to 1.15m cm/d in 2012-13, rising to 1.40m cm/d in 2013-14, hitting 1.86m cm/d by 2014-15.

“It is indeed comforting that we have a long-term contract in place,” adds Sabarmati. Of the 400,000 cm/d Sabarmati receives from Dahej, 250,000 cm/d is from BPCL and 150,000 cm/d is from GSPC at $12.50/mmbtu.

Sabarmati also receives 250,000 cm/d through a short-term GSPC contract, and sources an equal amount as spot R-LNG at $16.50/mmbtu. “We aren’t big enough to risk relying 100% on (volatile) spot R-LNG (even though this can sometimes mean short-term savings),” we hear.

“We must strike a balance somewhere.”

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