Race to capture gas market in Maharashtra

Vol 3, PW 17 (15 Sep 99) Midstream & Downstream

Only a fool would underestimate the significance of GAILs decision to formally join hands with Total.

This is the first time in the brief history of Indias emerging LNG sector that a state-owned company has so clearly defined its allegiance to a single foreign-backed LNG project. Whats more, it (arguably) puts the Trombay LNG project ahead of its nearest rival at Dabhol - backed by Enron - in the race to capture the market for re-gassified LNG in Maharashtra and surrounding areas.

By opening up its existing infrastructure to the joint venture, GAIL is handing Total/TEC a ready market. Further, pressure on Total and TEC from the Indian oil ministry to grant GAIL an unprecedented 33.3% reveals a level of Indian government commitment not in evidence with any other private sector LNG project in India.

Suppliers of LNG are also happy with the deal. This report learns Qatar General Petroleum Corporation (QGPC) has been telling Total to sign a deal with GAIL before approaching it for talks on the supply of LNG.

These talks are now expected to accelerate, as are plans by the joint venture to construct two LNG carriers, possibly in alliance with the Shipping Corporation of India (SCI). Official approvals for the site of the LNG complex are also at an advanced stage, with only environmental and port clearance outstanding.

The land belongs to Tata, thus removing one key layer of approval. Total tells this report the FEED for Trombay will be complete by end-November, with EPC tenders issued before the end of the year and a winner selected in the first quarter of 2000.

First supplies of LNG at Trombay are slated for 2003.

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