Petronas targets India for future LNG sales

Vol 16, PW 24 (27 Jun 13) Midstream & Downstream

Petronas, the world’s second largest LNG exporter after Qatar, is eyeing the Indian market.

“We want to enter into long-term LNG supply agreements (with Indian customers),” a Petronas source told this report in Kuala Lumpur on June 14, on the sidelines of the Asia Oil & Gas Conference. Until now Petronas has sold only spot LNG cargoes to India but has no long-term LNG contracts.

Within two years it expects to have surplus LNG looking for a home from three under-construction projects: from 2015 the company will have 3m t/y available from Train 1 of the Santos-promoted coal seam gas to LNG project at Gladstone in Australia, where Petronas partners Total and KOGAS; from 2016 the 2.5m t/y capacity Train 9 will come onstream at the Bintulu gas liquefaction factory at Sarawak in Malaysia; and from 2018, Petronas will have 6m t/y surplus LNG from the shale gas to LNG project in Canada executed by wholly-owned subsidiary Progress Energy Canada. All this is in addition to 24m t/y LNG Petronas has from established gas liquefaction trains at Bintulu.

Around 60% of current Bintulu production goes to Japan, the rest to South Korea, Taiwan and China. But Japanese and South Korean policymakers want to reduce the share of LNG in the country’s fuel basket while growth in the US, European and Canadian markets is negligible.

Petronas wants to cash in on the widening gap between gas demand and supply in India. But it recognises that unlike Japan, South Korea or Taiwan, India is a price sensitive market.

Note: “It will be all about pricing (in India),” says Petronas. “In the next one or two years there will be a lot of uncertainty about (LNG) prices.

” India is a prime destination for LNG with four floating LNG regasification facilities and one shore-based LNG facility proposed along its eastern coast plus three established LNG terminals on the west coast: Dahej, Hazira and Dabhol. GAIL wants LNG for Dahej, Dabhol and its upcoming floating LNG terminal off Kakinada.

Petronet-LNG wants LNG for Dahej, Kochi and the proposed floating LNG terminal off Gangavaram. IOC wants LNG for its upcoming Ennore terminal while GSPC wants LNG at Mundra.

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