Shell and Petronet-LNG fight to win NTPC tender

Vol 10, PW 11 (21 Sep 06) Midstream & Downstream

Was it coincidence or planned Who knows, but rivals Shell and Petronet-LNG each took delivery of a spot LNG cargo at their respective terminals in Gujarat on the same day last week: (Sunday) 17th September.

Shells cargo of 130,000 cubic metres was brought to Hazira by LNG tanker Gallina from the North West Shelf in Australia; Petronet-LNGs 135,000 cubic metres cargo came from British Gas and its Idku LNG terminal in Egypt. Shells cargo was originally scheduled to arrive on 21st or 23rd September but was re-scheduled to 17th September.

Petronet-LNGs cargo is being equally divided between GAIL, Indian Oil and Bharat Petroleum but Shell is selling its LNG direct. Both cargoes, we hear, are primarily destined for NTPCs short-term gas requirement of between 4.5m cm/d and 5m cm/d.

On 15th September, NTPC opened price bids and four bidders are in the race: Shell, GAIL, Indian Oil and Bharat Petroleum. NTPC tells this report the winner will be chosen by the end of this week.

Interestingly, NTPCs tender indicates only the quantity required, but not the term for which supplies should be made. Why The period for which we will buy the gas depends on the price quote and the kinds of offers we receive, says a senior NTPC source.

NTPC needs the gas immediately, so the Dahej and Hazira LNG cargoes are timely. Still, NTPC is clear this tender is not for any committed gas supply.

This is purely what we call shortfall gas, to meet the gap between requirement and supply of APM (subsidised) gas. NTPC needs between 15m cm/d and 17m cm/d gas for its power stations at Kawas, Gandhar, Anta, Auraiya, Dadri and Faridabad but receives only between 12m cm/d and 13m cm/d.

Adds NTPC: We will not sign a take-or-pay contract nor will the supplier sign a supply-or-pay contract. We will buy the gas as and when we need it.

NTPC adds that this arrangement, has been working well for the past two or three months when we had a summer requirement of gas.