Awful timing for BPCL to plan more LNG imports

Vol 20, PW 5 (17 Nov 16) Midstream & Downstream

Bharat Petroleum has joined GAIL, IndianOil and others as an independent LNG importer but its poor choice of timing is raising eyebrows.

After landing its first spot LNG cargo at Dahej on October 31, PETROWATCH learns BPCL has lined up four more spot LNG deliveries for 2017. Reason to celebrate? Possibly, except that spot prices are rising.

And likely to continue rising until March 2017. BPCL's first 157,074-cubic metre cargo delivered on October 30 from Equatorial Guinea was sourced through Shell-affiliate SITME at a pricey $6.40/mmbtu.

Seven days earlier Shell delivered a similar size cargo for Essar Steel and GSPC at $5.60 - almost a dollar less and a sign BPCL needs to learn a thing or two about getting the best deal or that prices are heading inevitably north? More recently Shell delivered a 151,894 cubic metre cargo for Reliance at Hazira on November 9, also priced at $6.60.mmbtu.

Petronet-LNG tells us BPCL's four remaining cargoes will arrive either at Dahej or Kochi but most likely Kochi because BPCL operates a 9.5m t/y refinery at Ambalamugal which already receives between 300,000 and 600,000 cm/d of R-LNG from the Petronet-LNG terminal but will need more after its expansion to 15.5m t/y is completed by December and commissioned by March 2017. "BPCL wants one cargo every quarter," adds a source.

"Most probably in March, June, September and December 2017."