Petronet LNG confident of getting buyers for gas

Vol 5, PW 15 (12 Sep 01) Midstream & Downstream

Petronet LNG boss Suresh Mathur is a confident man.

He takes great pain to convince doubters that LNG is indeed a viable fuel for India. Mathur rubbishes news reports that Petronet LNG and its promoters are unable to get customers for the LNG due to land at Dahej, or that the solution lies in pooling the price of all gas - domestic and imported.

"This is all rubbish," Mathur tells PETROWATCH. "We will get customers.

We are organising customer meetings, draft gas sales agreements are being given to customers." Mathur reckons that between 60- 70% of Petronet-LNG's prospective customers are fertiliser companies using naphtha. "They will certainly switch over to LNG because it is 20% cheaper than naphtha," he adds.

"These are Indian Oil's existing customers." Separately, Mathur told delegates at the Oil Asia seminar in Mumbai on 10th September that the government should "expedite" the announcement of a policy to encourage LNG. "Import of gas is the only way to supplement local gas production and meet the demand-supply gap," he said.

"We need a consumer friendly LNG policy." Mathur called for "refreshing reforms and robust financial arrangements" to develop the gas market in India. "This will have great implications on cost and funding.

This confidence is a must in the minds of investors in the LNG chain." Mathur listed out the concerns dominating the Indian LNG market. From the suppliers point of view these are: Creditworthiness of consumers Contractual commitments Restructuring of state electricity boards Subsidies on fuel Transportation agreements Buyers' concerns relate to: Acceptability of high take or pay price Crude oil linked prices High level of taxes and duties