November 20th deadline for Petronet-LNG

Vol 4, PW 18 (11 Oct 00) Midstream & Downstream

It seems to be good to be true and it probably is.

This report learns that a date of November 20th has been set for the signing of a shareholder agreement between the promoters of Petronet-LNG. Most readers will be tired of hearing that the shareholder agreement is to be signed "next month" only to discover it has been cancelled at the last minute.

Unfortunately the risk is that this date - like others before it - will not be met. No prizes for guessing the culprit: National Thermal Power Corporation.

"They have always been a problem and they always will be a problem," reveals a source, "Before we spent months arguing about their equity stake, now they want preferred customer status." Contacted by Petrowatch, CP Jain, Chairman, NTPC, said: "It's a complex issue. We need to discuss it".

Complex Not really. At issue is the purchase price of gas from Dahej.

Unlike Ennore, the gas price negotiated for Dahej is linked to the price ofinternational crude and thus liable to fluctuate. Only the cost of shipping, regassification and pipeline freight is fixed.

Petronet-LNG's inability to offer a fixed gas price to NTPC lies behind its ambivalence towards the shareholder agreement. Another factor is its alliance with Gujarat Pipavav LNG, promoted by British Gas and Seaking Infrastructure.

On 7th July last year NTPC signed a MoU for 26% of GPLNG. Interesting to watch is if Jain can play one project off against the other with the dexterity of his nimble-footed predecessor Rajendra Singh