Another cargo of LNG expected at Hazira on 21st May

Vol 10, PW 2 (18 May 06) Midstream & Downstream

Shell and Total are expecting another cargo of LNG at their Hazira terminal in Gujarat on (Sunday) 21st May.

PETROWATCH understands the 145,000 cubic metre Muscat LNG carrier (bigger than the conventional 135,000 cubic metre carrier) built by Kawasaki of Japan will be delivering LNG from Abu Dhabi. Shells preceding two cargoes on 1st May and 15th April were from Oman.

The cargo has been booked, we hear. Shell is already working on getting cargoes after this one.

This is the third cargo of LNG that Shell is bringing to Hazira since it revived its dormant LNG terminal in April this year and the sixth since it commissioned the terminal in April last year. Like its previous two cargoes, regassified LNG from this shipment is destined for Essar, GSPC and other customers in the fertiliser and power sectors.

Theres a fairly broad cross section of customers buying Shells LNG, we hear. One thing they all have in common is that they dont want to pay $21 per mmbtu for naphtha.

Unclear is if Shell is maintaining the same competitive price it secured for the earlier two cargoes. For these PETROWATCH reliably understands Shell paid $8 per mmbtu CIF (Delivered ex-ship) as the price of its LNG to the Hazira terminal.

This translated into $9.07 per mmbtu at the Hazira downstream flange. Shell played some very clever trading games to get such a competitive price, we hear.

The Koreans are paying much higher. Other industry watchers agree.

Shells price is lower than the prevailing international rates. Contrast Shells price with the price GAIL paid to Sonatrach of Algeria for its first cargo of spot LNG scheduled to arrive at Dahej on 20th May.

We reliably understands from sources in the international LNG industry that GAIL paid $10 per mmbtu CIF as the delivered ex-ship price of its LNG to Dahej some $2 higher than Shell. GAIL is still very green at this LNG spot trading game, says a source.

They probably need to prove they can do it on their own. Shell could have offered them a lower price if they had bought directly from Hazira.