Testing the market for a cheaper LNG price

Vol 6, PW 1 (13 Mar 02) Midstream & Downstream

BEWARE THIS IS not the first time NTPC is looking overseas for LNG.

In February 1999 it embarked on a similar exercise and contacted over a dozen potential suppliers, only to look foolish when it inexplicably abandoned the process mid-way. Could it happen again One industry analyst tells PETROWATCH he suspects NTPC is only testing the market.

"This could be NTPC's way of telling its customers that it has at least tried to look for cheaper LNG," he reveals. "And when it can't find it, it'll turn around and say 'look we are forced to buy from Petronet-LNG because we can't find anything cheaper'." If NTPC does go ahead, British Gas and Shell are obvious candidates as suppliers.

Both have LNG import plans for Gujarat. But can they deliver cheaper than Petronet-LNG "As of now Dahej has the cheapest LNG price in the Asia Pacific region," we are told.

"And capacity can be doubled with just $70m additional investment." Against that there's little evidence of bricks and mortar construction at either Pipavav (British Gas) or Hazira (Shell). Photographs taken end-January of Shell's proposed Hazira terminal seen by this report reveal a vast stretch of sandy beach with a road running round it, built by the Essar Group which has a steel factory nearby.

A few wooden stakes mark the spot of Shell's proposed terminal. A Niko gas well sits in the distance.

However, Shell maintains "Hazira is proceeding to schedule for first commercial gas out to customers in 2004."