Don't forget Yemen LNG in NTPC gas tender

Vol 7, PW 16 (22 Oct 03) Midstream & Downstream

Be prepared for a surprise when National Thermal Power Corporation announces a winner for its tender to supply 3m t/y natural gas or LNG for its Kawas and Gandhar power plants in Gujarat.

Until now most were happy to assume that Shell with its 5m t/y LNG terminal at Hazira and Reliance with its 14-tcf find in the Krishna Godavari basin were the only real contenders. Think again.

Information available with PETROWATCH suggests Total affiliate Yemen LNG could spring a surprise with the cheapest gas price of them all and clinch the contract. Total is no stranger to the LNG business in India.

It once had plans to set up an LNG terminal at Trombay in Maharashtra with the Tata Group and GAIL. Today, Total and Yemen LNG are putting the experience gained from the aborted Trombay project to good use.

An industry source associated with Trombay tells PETROWATCH that the project's LNG price calculations are still valid today and could be extended to the NTPC tender. Consider this: NTPC wants LNG at its burner tip at between $3.00-3.20 per mmbtu.

According to our source, Yemen LNGcan match this price. "Yemen LNG had offered LNG for Trombay at about $2.50 per mmbtu FOB.

Add 26 cents for shipping and 50 cents for regassification (by Petronet-LNG or Shell) and you get a regassified LNG price of about $3.26 per mmbtu excluding taxes." More, Yemen LNG could cut shipping costs from 26 cents to 24 per mmbtu because of the ease of operating the 60-80 metres draft and low siltation portthat it will build to berth LNG tankers at Bal Haf on the Gulf of Aden. Yemen LNG has no liquefaction facility or LNG export terminal but industry sources believe it could build these facilities in time to meet NTPC's delivery schedule for regassified LNG to India.

"It takes about 36 months to construct these facilities," adds our source. "Once it has the NTPC order in hand, Yemen LNG will award the construction contracts." NTPC is still evaluating the bids it has received for LNG, natural gas and regassification.

Informal" meetings with bidders are over and "formal" meetings are scheduled for later this month.