Shell's second LNG cargo expected in July

Vol 9, PW 2 (04 May 05) News in Brief

Shells LNG terminal at Hazira is likely to receive its second cargo of LNG in June or July.

No fixed date is available because its not clear from where Shell will source the next cargo. So far, Shell has only one customer for its regassified LNG: Gujarat State Petroleum, with whom it has signed a gas supply deal for an initial three cargoes this year.

Shell began first commercial deliveries to GSPC on 1st May under a contract for the supply of 1m cm/d of gas at $3.75 per mmbtu. On 17th April, Shell tanker Gemmata anchored at Hazira carrying 140, 500 cubic metres of gas.

Industry observers believe Shell is making a loss of approximately $10m per cargo. The total cost of gas after adding transportation and regassification costs could run up to $8 per mmbtu, reveals an observer.

Shell is selling for less than half the price. Simple arithmetic tells you it is losing money.

Shells third LNG cargo is tentatively planned for September this year.