Shell promises to be first with LNG shipments to India

Vol 3, PW 25 (19 Jan 00) Midstream & Downstream

Shell has raised the stakes in the race to become the first company to land supplies of LNG onto the shores of India.

On (Monday) 17th January, Phil Watts, Shells Group Managing Director, and CEO of Shell group's exploration and production, coal, gas & power business, told journalists in Ahmedabad that the company hopes to land its first LNG at the port of Hazira by December 2001 22 months from now. Watts said the LNG to India would initially be sourced from Oman (where Shell has a stake in Oman LNG) and that future supplies could come from as far afield as Malaysia, Australia, Brunei or even Nigeria.

There are many potential sources, said Watts. We are one of the biggest LNG players globally so sourcing is not a problem.

In addition, Watts said Shell is in a position to provide value for money to Indian customers, by providing cheaper LNG than its rivals. I have personally interacted with some of the buyers, adds Watts, We are sure that the project cost at Hazira is going to be much less than what has been accounted for.

Shells comments are likely to come as a rude shock to other companies with plans to import LNG to India. Only Enron has so far indicated that it will be in a position to start receiving LNG at its Dabhol plant by the end of 2001.

Other companies in the race for the Gujarat market notably British Gas and Petronet-LNG are aiming for 2003, by which time any potential buyers may have been snapped up. To help it identify potential LNG buyers, Shell has commissioned accountants KPMG to carry out a commercial study of the Hazira project.

Is Shells confidence justified The company was awarded the LOI for development of Hazira in November last year. It is far from clear if the multi-purpose port will be ready by the December 2001 deadline.