Huge interest in EoI for 25m cm/d from GAIL

Vol 16, PW 23 (13 Jun 13) Midstream & Downstream
     

Here's an example of how desperate Indian gas customers are.

By June 9 exactly 107 companies had responded to a GAIL notice inviting EoIs for 25m cm/d of R-LNG, offered at between $13.25 and $13.50/mmbtu available from 2017-18. "Securing gas is more important than the price,” says a fertiliser industry source.

Adani, Essar and Reliance were among those to reply and yet more are likely to respond as GAIL has set no EoI deadline. GAIL's price of $13.25 to $13.50/mmbtu is the ‘indicative’ Delivery Ex-Ship (DES) price assuming a JCC price of $100/barrel and a Henry Hub price of $5/mmbtu.

"However the actual DES price of LNG would be based on an agreed formula," reads the EoI, "and depend on the Henry Hub and JCC prices prevailing at the time of gas supply." Add customs duty, regasification charges, marketing margin, transmission costs and local taxes and the price should be $18 to $19/mmbtu at the burner tip, at today’s prices.

Most R-LNG will come from three 20-year deals GAIL has signed in the past 24 months: 3.5m t/y from Cheniere Energy's Sabine Pass terminal in Louisiana; 2.3m t/y from Dominion Cove Point in Maryland; and 2.5m t/y from Gazprom. Cheniere and Dominion supplies will begin from 2016-17 and Gazprom from 2019-2020.

"We don’t know what price GAIL signed the two American LNG deals but $13.50 DES is competitive,” adds Essar. In 2008-09, Essar paid as high as $22/mmbtu for imported spot LNG.

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