Torrent backs off in MSPA row with LNG traders

Vol 20, PW 6 (01 Dec 16) Midstream & Downstream

Torrent Power is doing everything it can to make life easy for potential LNG suppliers! In an unexpected development, Torrent has relaxed a major tender condition in its offer for invitations to supply 38 LNG cargoes over five years by allowing bidders to send in bids by the November 14 deadline without signing Master Sale and Purchase Agreements (MSPAs).

When it issued the tender on October 21 Torrent initially gave bidders only 21 days until November 11 to sign the MSPA, triggering a sharp response. "Negotiating a MSPA before finalising it is quite a detailed, complex and time-consuming job," says a LNG supplier.

"This is Torrent's first time so it initially misjudged the timeframe necessary to negotiate a MSPA." Companies like Mitsui, Gunvor, Trafigura, Marubeni, Koch and Vitol asked Torrent to either extend the deadline for signing the MSPA or allow them to bid without it. Happily Torrent came to its senses and now has an open-ended timeframe for the MSPA.

"We gave two alternatives to bidders," says a Torrent source. "Go through a draft MSPA prepared by us and submit comments or submit your own draft MSPA before bidding." He describes the response to the tender as "good" but refuses to disclose the number of bids received.

An LNG source speculates Torrent must have received 15 to 20 bids. "Almost all the big portfolio players were interested," he says.