Hard times for Shell’s Hazira LNG terminal

Vol 25, PW 4 (27 Jan 22) Midstream, Downstream, Renewables

Only one cargo a month is trickling in at Hazira in what could be a sign of things to come as Shell's most significant customer Reliance continues its transition away from LNG imports.

On January 22 (2022), Hazira saw one 216,235-cubic metre cargo arrive from Qatargas aboard Q-flex tanker Al-Thumama - the only January cargo. Before that, Hazira took in a 143,783-cubic metre cargo on December 6 (2021) for steelmaker AMNS from Nigeria-LNG for $31/mmbtu.

November similarly saw only one shipment. On November 15 (2021), a 33,090-cubic metre cargo arrived at the terminal, sourced by Shell Energy through its global affiliate SITME from Nigeria LNG for $22.30/mmbtu.

"Reliance was Hazira's main customer, landing an average four cargoes a month," says a rival LNG terminal operator. "But Reliance is now going slow; hard times are here to stay for Hazira."

Reliance last used Hazira five months ago, on August 15 (2021), when it shared a 52,828-cubic metre Qatargas cargo with Shell for $11.61/mmbtu. "Had GAIL not stepped in," adds another source, "it would have been more difficult for Shell at Hazira."

GAIL landed four cargoes at Hazira in September (2021) and three in August (2021). Between January and July (2021), GAIL landed another nine at Hazira.

"Reliance needs LNG," we hear. "But it won't take any LNG cargoes now because of the high prices; once the prices soften, it might enter the market again."

Another source points out that Reliance-BP has planned to launch a gas tender for 12m cm/d in April (2022) for supplies from their R-Cluster, Satellite and MJ-1 fields at the eastern offshore KG-DWN-98/3 (KG-D6) block. "Perhaps after the April tender, Reliance may not take any more LNG," speculates another source.

Reliance has already tied up 9m cm/d of domestic gas from KG-DWN-98/3 and two CBM blocks in Madhya Pradesh: Sohagpur West or SP (West)-CBM-2001/1 and Sohagpur East or SP (E)-CBM-2001/1. It uses this gas at its 1.24m b/d Jamnagar refinery and its five petrochemicals complexes at Vadodara, Dahej, Hazira, Patalganga and Nagothane.

"Reliance is in a good position concerning gas supplies," we hear. Besides domestic gas, Reliance also produces 'syngas' from pet coke-fired gasifiers at its Jamnagar refinery, equivalent to 6m cm/d of natural gas.