Torrent in talks for cheap R-LNG for Sugen

Vol 16, PW 1 (26 Jul 12) Midstream & Downstream

Gas-fired power stations in India are shedding their age-old prejudice against spot R-LNG, even though prices are higher than ever.

Take Gujarat-based Torrent Power. PETROWATCH learns Torrent is talking to GSPC and IndianOil to source R-LNG for the 382.5-MW expansion of its 1147.5-MW Sugen power station in Gujarat.

Torrent urgently needs 40,000 cm/d of spot R-LNG by September so it can meet an internal target to commission the expansion by January 2013. Torrent hopes to sign a spot contract soon with GSPC but is unlikely to get ‘ex-terminal’ R-LNG any cheaper than $16/mmbtu.

After commissioning, Torrent wants to fuel the expansion with long-term R-LNG from IOC, which is already supplying long-term R-LNG to the established Sugen station at $10.07/mmbtu, ex-terminal. “No other company besides IOC is ready to sign a long-term R-LNG contract,” says a source close to Torrent.

“Bharat Petroleum and GAIL can supply R-LNG but only spot.” Called Unosugen, the Rs1700cr ($300m) expansion when commissioned will increase total generating capacity at the Sugen site to 1530-MW.

Unosugen is a power ministry-designated ‘mega power project’ entitled to tax and duty concessions and in theory is a ‘stand-alone’ station even though it is adjoining the core Sugen site near Surat. At current spot rates Torrent’s unit electricity generation cost will be as high as Rs9.5, assuming landed R-LNG at $24/mmbtu.

Torrent signed a long-term GSPA with IOC in 2006 for 40,000 cm/d of R-LNG and a contract for 90,000 cm/d from the PMT fields in the same year. Torrent later inked a deal with Reliance for 3.31m cm/d D6 gas on April 28, 2009.

Sugen barely receives 40% of KG-D6 supplies, only 50% of PMT supplies and 90% of IOC supplies.

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