GSPC promise to take 2m t/y from Swan FSRU

Vol 16, PW 5 (20 Sep 12) Midstream & Downstream

Despite its unceremonious exit from the GSPC Pipavav project, Swan Energy has no qualms about lining itself up as the principal R-LNG supplier for the soon-to-be commissioned 702-MW power station.

And despite the bad blood, it seems GSPC has no problem getting into bed with Swan again, this time with a promise to take whatever R-LNG it can offer. No surprise then to learn that GSPC directors - including managing director Tapan Ray and state energy secretary DJ Pandian - gave ‘in-principal’ approval to offtake 2m t/y of R-LNG from Swan’s proposed FSRU during a board meeting on August 9.

Still unclear is if Swan will deploy a 3m t/y FSRU or a 4.5m t/y facility; or indeed whether it will deploy anything at all! But GSPC’s agreement to become the ‘anchor’ customer will give Swan - better known as a Mumbai-based real estate developer - enough clout to reach ‘financial closure’. Estimates suggest a 3m t/y FSRU would cost around $525m and a 4.5m t/y facility marginally more at $575m.

Early next year, GSPC and Swan are expected to sign a ‘term-sheet’ but little is known about what GSPC will pay for the R-LNG. “Price is not important,” says a source.

“What’s more important is securing supplies for such a large project.” He adds: “Swan has not tied up its LNG supplies yet.

Nobody knows what sort of arrangement GSPC wants with Swan; it could just be a tolling arrangement.” For now Swan’s focus is to secure the FSRU from one of three companies it is talking to: Texas based Excelerate Energy, John Fredriksen-owned Golar LNG or Canada-based Teekay Shipping Corporation.