Shell confident of آ“beating competitionآ” in Gujarat

Vol 3, PW 24 (22 Dec 99) Midstream & Downstream

In Gujarat meanwhile, the race to capture the gas market should accelerate, following a decision by Shell to proceed with the development of an LNG complex at Hazira.

This report understands Shell International Gas awaits an official invitation by the Gujarat Maritime Board (GMB) to begin a Detailed Feasibility Report (DFR) of its development plan for Hazira. An official GMB invitation should not take long.

In October and after months of delay, Gujarat issued a Letter of Intent (LOI) to Shell over a rival bid from Elf/Reliance/Tractebel for the development of Hazira, one of four ports on the Gujarat coast selected for development of an LNG complex. The others are Dahej (by Petronet-LNG), Pipavav (British Gas) and Maroli (NATELCO and Unocal).

Shell has replied positively to the LOI in a written communication to the GMB and now awaits a formal invitation to begin talks. Shell has simultaneously begun moves to secure state and central government approvals, required for a project of this magnitude.

A source tells this report Shell is extremely serious about making Hazira an LNG hub for Gujarat. This is not just a paper exercise, Petrowatch learns.

Shell is also confident it can capture the market for regassified LNG in Gujarat ahead of British Gas and Petronet-LNG, even though its project is months (if not years) behind its rivals. We are chasing the same market but well get there first.

Why the confidence Shell is unimpressed by the MOUs that both Petronet-LNG and British Gas have signed with potential buyers of its gas. Banks lend money on the basis of firm sales agreements, not on the basis of MOUs.

Rightly or wrongly, Shell believes it can beat the competition by luring customers on the strength of its globally recognised brand name and reputation. Many will ask if Shell is wise to be so complacent.

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