Price of $5.70 forecast for R-LNG from Karaikal
Promoters of the 2.5m t/y LNG import terminal at Karaikal are banking heavily on a significant reduction in global LNG prices by the time it is ready in 2011.
Information with this report indicates that talks are underway with potential suppliers in Australia, Malaysia and Iran. Price is not yet on the agenda, reveals a source.
But it is expected that the landed price of LNG will be around $5 per mmbtu for about 10 years from 2010-11. Add to that about 60 cents per mmbtu as regassification costs and 10 cents per mmbtu for transportation and Karaikal R-LNG could be available to customers for about $5.70 per mmbtu exclusive of taxes.
When commissioned, Karaikal will be the first LNG terminal on Indias eastern seaboard, assuming GAIL and Indian Oil dont get their proposed LNG terminal at Ennore up and running before that. Can Karaikal LNG compete with cheaper domestic offshore gas that Reliance, GSPC and ONGC will have landed by then from the Krishna Godavari basin Most certainly, we are told.
KG gas will not be available to anybody in Tamil Nadu, Kerala or Karnataka, says a source. Some of it will be used in Andhra Pradesh but the bulk is destined for the northern and western markets.
These three states will have to depend on LNG. Karaikal promoters estimate that gas demand in these three states is currently 15m t/y.
5m t/y will be met by Petronet-LNGs Kochi import terminal and 5m t/y will be met by the Karaikal terminal. That leaves another 5m t/y demand still unmet.
ONGC gas from the Cauvery basin is depleting, further increasing the supply-demand gap. Some 30% of the R-LNG from Karaikal will be used by the proposed 1000-MW power station; 45% by fertiliser, ceramics, glass, cement and sponge iron industries; and the balance 25% will supply planned city gas distribution networks.