No one interested in IOC tender for 0.5m t/y LNG

Vol 8, PW 9 (28 Jul 04) Midstream & Downstream

Indian Oils limited tender for the purchase of 500,000 t/y of LNG for the next three years looks as if its going nowhere.

On 12th March, IOC issued a tender to several LNG suppliers in the Middle East and South-East Asia, among them Petronas, Oman LNG, RasGas, Shell, Pertamina, Brunei LNG and Kogas. We did not want to miss anybody so the document was sent to all LNG terminal owners, reveals IOC.

But sadly, the response has been less than encouraging, forcing IOC to extend the deadline for submission of price bids by a month from 10th May to 10th June and then indefinitely. IOC is examining several comments from interested parties, adds IOC.

After this we will modify the Request for Proposal document and then announce a new deadline. An acute scarcity of LNG is the primary reason for the disinterest from international LNG suppliers.

Read the tender document to see that IOC wants the LNG from this fiscal (commencement year of purchase - 2004-05). But unfortunately there is no LNG available either from the Middle East or South East Asia for delivery this fiscal.

There are no cargoes in the market for this year, says one company. Its also the price.

No one is ready to accept Indian demands of $3 per mmbtu or less. Instead, LNG suppliers are making huge profits selling their cargoes to the US and Europe.

Americas Henry Hub price of $5 to $6 per mmbtu is double what India is ready to pay, he adds. Why should I sell to India IOC is candid enough to admit, Price is indeed an issue with potential bidders.

Despite this, IOC is confident it can import 500,000 t/y of LNG, despite the obvious attractions of the US market. I wish luck to all those who are selling their LNG to the American markets, adds IOC.

According to the tender document, IOC wants delivery of 25,000bn British Thermal Units (approx: 0.5m t/y or 7-9 cargoes per annum) over the next three years for delivery ex-ship to Petronet LNGs Dahej terminal.