Shell wins six-cargo LNG deal from Torrent

Vol 20, PW 9 (26 Jan 17) Midstream & Downstream

Shell has won an LNG tender to supply six cargoes to Ahmedabad-based gas-based power producer Torrent Power.

Torrent signed the deal in mid-January with its old friend Shell, and wants the cargoes delivered from April to December 2017 at Dahej. Shell is believed to offer a rate equivalent to 11% of the prevailing Brent crude oil benchmark.

"This means Torrent gets what it wanted," says a source. "Namely a price of less than $6/mmbtu." Torrent chose Shell because of the good working relationship it has with the Anglo-Dutch company.

Of the total nine cargoes imported by Torrent since November 2013, Torrent has sourced six cargoes from Shell and two from BG (now Shell) with only its first 'parcel cargo' sourced from Yemen LNG with GAIL. Also in the race for the latest six cargo tender was Australia's Origin Energy which holds 37.5% in the Australia Pacific LNG joint venture.

Torrent last October announced it needed 38 LNG cargoes in a phased manner till December 2021. Under Phase-I it plans to bring in 22 cargoes from April 2017 to December 2019.

The six cargoes which will be delivered by Shell form the first tranche of Phase-I. Separately, Torrent on January 9 approached the PNGRB for permission to set up a 25-km dedicated pipeline connecting GAIL's Dahej to Uran pipeline to its own 1530-MW Sugen power station with a tap-off at Morthan and Bhadol villages in Surat district.