Essar cuts out the 'middleman' in LNG imports

Vol 20, PW 13 (23 Mar 17) Midstream & Downstream

Essar wants to accelerate spot LNG cargo imports this year as it prepares to set up its own 6m t/y FSRU at Hazira.

Exclusive data collected by PETROWATCH shows that Essar imported its first LNG cargo on its own account at Hazira on March 13 - something it has wanted to do for the last two years. Last year it imported two shared cargoes as a test.

Its latest 69,777-cubic metre cargo arrived aboard Bahamas-flagged LNG carrier Grace Cosmos LNG on her maiden trip to India. The NYK Line-operated 150,000-cubic metre capacity tanker had earlier discharged a cargo of over 70,000-cubic metres at the Engie-operated Fos Cavaou LNG terminal in France before heading to Hazira.

Engie sourced the cargo from Norway's Snohvit LNG terminal operated by state-controlled Statoil. "Essar must have got a good deal below $10/mmbtu from Engie," says an industry source.

"This is India's first LNG import from Fos Cavaou." No doubting is Essar's appetite for gas: it needs 10.78m cm/d for its steel mill, two gas-based power stations with a combined 1015-MW capacity and Vadinar refinery. An Essar source adds the company's goal is to cut out middlemen like IndianOil and GSPC.

"We're sourcing R-LNG at a very high price from IOC and GSPC," he says. "Bringing our own cargoes will eliminate the middleman's commission." Even saving $0.50/mmbtu at the burner tip at Essar's Hazira and Bhander power stations can help.