IFFCO reveals new آ‘matureآ’ gas purchase strategy

Vol 8, PW 7 (30 Jun 04) Midstream & Downstream

For once Indias state-owned fertiliser behemoth IFFCO (Indian Farmers Fertiliser Cooperative) has decided to be reasonable.

Thankfully, IFFCO chairman US Awasthino longer makes public statements that hes not prepared to pay a single cent more than $3 per mmbtu for imported LNG. On 21st June, IFFCO floated a tender to procure 20m cm/d of regassified LNG or domestic natural gas for its four proposed power plants in Gujarat, Uttar Pradesh and Andhra Pradesh.

The company wants 5m cm/d of natural gas for each of the proposed power projects to be set up in Kalol (Gujarat), Aonla and Phulpur (Uttar Pradesh) and Nellore (Andhra Pradesh). We are looking at a price band of between $3 to $3.5 per mmbtu; thats our limit, an IFFCO official tells PETROWATCH.

We know that customers are paying even $4.5 per mmbtu but we wont. Experience of watching other tenders has influenced IFFCOs new gas purchase initiative.

IFFCO has matured, he said. After following NTPCs tender so closely weve understood how prices can play havoc if not negotiated properly.

By 2007, IFFCO wants to replace naphtha with gas for its fertiliser plants. The company also has an immediate requirement of 9m cm/d of natural gas at its existing fertiliser plants: two in Aonla and one each in Kalol and Phulpur.

IFFCO is confident that Petronet-LNG, GAIL, Shell and British Gas will bid in the tender. It also expects Reliance to submit a competitive bid for domestic natural gas.

According to this official, IFFCO will examine any price offered by suppliers. We know the difference between the pricing of LNG and natural gas, he said.

Ultimately it is the supplier who will decide what price to offer. Well select the most competitive one.

Bidders must submit their preliminary bids by 2pm (IST) 20th August 2004 at IFFCOs Gandhinagar office in Gujarat.

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