Enron undaunted by Shell challenge

Vol 3, PW 26 (02 Feb 00) Midstream & Downstream

Shells announcement that it hopes to land first imports of LNG to India by December 2001 has left many incredulous, not least Enron, which has a similar target of it own.

So, who will win the race A look at the facts suggests it will be Enron. In 1997, Enron received permission to increase capacity of it LNG terminal at Dabhol to 5m t/y.

Construction here is proceeding apace and should be ready for first delivery in the last quarter of 2001, to coincide with the commissioning of Phase II of a gas-fired captive 2,184-MW power plant promoted by the Enron-backed Dabhol Power Company. Phase I, which presently runs on naphtha, will switch to gas at this time.

In March 1998, Enron signed a Sales Purchase Agreement (SPA) with AdGas for the supply of 500,000 tonnes of LNG and later that year in December signed an SPA with Oman LNG for a further 1.6m t/y. All of Enrons Middle Eastern LNG has been earmarked for the Dabhol Power Company.

In the past few weeks Enron has been holding meetings with Oman LNG and AdGas to ensure that the train is on schedule. From Mumbai, meanwhile, comes a report that Enron has negotiated a price of $3.87 per BTU as the landed cost paid for the LNG by Maharashtra State Electricity Board (MSEB).

Enron has neither confirmed nor denied this figure. Price aside, compare Enrons progress to that of Shell at Hazira, where construction has not even begun.

One analyst suggests the only way Shell can meet its December deadline is to finance the Hazira development from internal accruals and employ an offshore loading and unloading LNG facility, which may not require the construction of LNG facilities onshore. Whoever wins the race, both Shell and Enron can at least take comport from the fact that they are targeting different markets.

For Enron it is Maharashtra and southern India, for Shell it is Gujarat.