NTPC meets gas suppliers for Kawas-Gandhar tender

Vol 7, PW 18 (19 Nov 03) Midstream & Downstream

NTPC has begun the second and final round of talks with bidders for its 3m t/y gas tender for Kawas and Gandhar.

PETROWATCH learns NTPC has sent a one-page letter to each shortlisted bidder inviting them for, final discussions to resolve deviations, both technical and commercial. NTPC has set aside three days for each bidder.

First in line is Petronas from 17th to 19th November, followed by Reliance, then Shell. Yemen LNG - a TotalFinaElf associate - is last in the queue and will hold talks with NTPC from 9th to 11th December.

When discussions are complete, NTPC will send out its final list of amendments and invite bidders to either submit fresh price bids or stick by the price they submitted on 2nd September. NTPC wants to open price bids by end-December, reveals a source.

NTPC meanwhile, continues to insist it wants gas delivered at below $3 per mmbtu, despite heated criticism and ridicule from LNG suppliers. Last week at a gas conference in Delhi, NTPC chairman CP Jain aggressively defended his position.

First, the existing supply of gas in India is at around $2.4 per mmbtu, said Jain. Second, only if the fuel cost is within $3 per mmbtu, can you get scheduling (to supply electricity produced) under the availability based tariff.

Beyond that it becomes unviable. Third, going by international studies, this price ($3 per mmbtu) is viable for suppliers to provide LNG in India.

Jain quoted international studies on the price of gas to support his argument. The figure that emerges is $1.78 per mmbtu for Iran, $1.97 per mmbtu for Yemen and $1.6 per mmbtu for Qatar.

Adds Jain: Regassification and transportation should not cost more than 60 cents. Thus, the overall price can easily be under $3.

Jain is not blind to the criticism of his position. We are aware that people are saying NTPC has included unjust terms without listening to the parties.

We do not agree. Jain said many pre-bid meetings were held with suppliers and NTPC has included their suggestions.

Today, the terms are reciprocal. The guarantee demanded is very reasonable.