Petronet-LNG expecting first LNG from Exxon

Vol 20, PW 7 (15 Dec 16) Midstream & Downstream

After months of uncertainty, Petronet-LNG is poised to receive its first LNG cargo from the troubled Chevron-operated Gorgon LNG facility in Australia.

Originally slated to arrive end-January, a company source reports delivery to its stranded Kochi terminal will most likely be pushed back after the 15.6m t/y Barrow Island facility, commissioned in March this year (2016), was forced to shut down for a third time in November amid persistent teething problems. "There have been delays in the shipment of five Gorgon cargoes," says a source.

"But so far no cancellations." For its part Petronet-LNG is ready. On November 30, the BSE-listed Indian LNG importer took delivery of Prachi, a $205m Hyundai-manufactured LNG tanker, built solely to ferry LNG from Gorgon under the company's iron-cast 20-year SPA signed with US giant ExxonMobil on August 10, 2009 at an unsustainable (against current benchmarks) price of 14.5% to the JCC.

"Petronet-LNG will have no choice but to re-negotiate the price with ExxonMobil," adds a source. "But Australia is not Qatar and RasGas is not Exxon.

In Australia government pressure will not work. Petronet-LNG must deal directly with Exxon." At 14.5% to JCC, analysts expect the landed cost of Gorgon LNG at Kochi to be around $7.50/mmbtu.

Add $1.10 for transportation from Australia plus regas, taxes, pipeline tariffs and you're looking at a burner tip price of nothing less than $9.50/mmbtu.

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