Petronet-LNG ready to sign SPA in September

Vol 6, PW 13 (28 Aug 02) Midstream & Downstream

ALSO PLANNED FOR the first week of September is a Sale Purchase Agreement between Petronet-LNG and each of its offtakers: Bharat Petroleum, Indian Oil and GAIL.

"All pending issues have been resolved," reveals a source. "We could have signed earlier but getting the key people together for the event was possible only in the first week of September." Also close to finalisation is the Gas Transmission Agreement between Petronet-LNG and GAIL.

"The main principles have been agreed," he adds. "Only the details need to be worked out." We understand the SPA with the 'offtakers' will be for 25 years 'back-to-back' with Petronet-LNG's gas purchase agreement with RasGas.

Downstream agreements with end users will be for shorter periods. "No gas user can be expected to sign 25-year agreements," we learn.

"We will have a mix of short and long-term agreements which will be aggregated to tie-in with a 25-year LNG supply agreement." Separately, we learn Petronet-LNG is responding cautiously to a request by fertiliser co-operatives IFFCO and KRIBHCO's for equity in Dahej. "They want gas directly from us," he adds.

"That is why they want stakes in the project. If we allow this our offtakers will lose money in margins and transportation tariff." At Dahej construction work for the terminal and jetty is 50% complete.

The roof of the second LNG storage tank was raised on 19th August, following completion of the outer tank wall. "About 95% of the piling for the regassification terminal is complete and the structure is now being raised.

We are on schedule to complete construction by December 2003."