Oman refuses to talk LNG till Dabhol is sorted out

Vol 9, PW 22 (23 Feb 06) Midstream & Downstream

Oman is refusing to discuss future LNG supplies to India until its earlier contracts with the Enron-promoted Dabhol Power Company are resolved.

Two Indian government-led teams that visited Oman in November 2005 and January 2006 were bluntly told that the previous contracts with Dabhol Power Company need to be commercially closed before discussing any fresh LNG supplies to Dabhol, which is now being revived by GAIL and NTPC, joint owners of Ratnagiri Gas & Power. India is looking for between 600,000 t/y and 1.8m t/y LNG from Oman for Dabhol, beginning this year itself.

GAIL and NTPC believe Oman can spare 600,000 t/y LNG in 2006, and 800,000 tonnes each in 2007, 2008, 2009 and 2010. Oman, we learn, is the best source for LNG supplies to India given the urgency to restart Dabhol and meet soaring power shortages in Maharashtra.

During the November 2005 visit to Oman, power secretary RV Shahi dwelt on the centuries old relationship between the two countries and sought help from Omanese friends to supply the LNG quantity which they can spare to start the project of national importance to India. Oman was unimpressed by this gushing sentimentality and Agnus Cassens, general manager and chief executive of Oman LNG, reminded his Indian visitors that the earlier LNG sale purchase agreement with Dabhol remained a legally valid document.

He also pointed out that Oman LNG had been making take or pay claims against the Dabhol Power Company but was receiving no replies. Cassens added that when Dabhol Power Company was being liquidated and its assets were being transferred to Ratnagiri Gas & Power, Oman LNG, as a bonafide stake holder, should have been at least kept informed.

This bluntness was evident even when Prithviraj Chavan, minister of state in Prime Minister Manmohan Singhs office visited Oman last month. Oman LNG has even refused to sign a confidentiality agreement with Ratnagiri Gas & Power or comment on the draft Master Spot LNG purchase agreement.

First settle the previous Dabhol contract, says Oman. We hear a meeting is scheduled for the first week of March to discuss Dabhols earlier LNG contract with Oman.

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