Vol 3, PW 7 (28 Apr 99) Midstream & Downstream

Could India be the next destination for surplus condensate from Australias North West Shelf If reports received by this report are anything to go by, the answer is clearly, Yes.

Condensate is a light oil produced in association with natural gas. In recent times, the North West Shelf has become a condensate surplus field, with no long term outlet.

Enter BHP Petroleum and Woodside Petroleum: two Australian companies, both in the North West Shelf consortium, and both with ambitions in India. BHP and Woodside have embarked on an ingenious strategy to simultaneously market surplus condensate and capture the LNG market in south India.

The strategy is ingenious in its simplicity. The target markets are Andhra Pradesh and Kerala.

The aim: to supply Independent Power Producers (IPPs) and fertiliser companies with condensate in the hope theyll switch later to LNG. In Andhra, demand from the power sector alone is 2.75m tonnes a year (t/y) of LNG or 2.2m t/y of condensate.

BHP plans a condensate fuel supply project in Kakinada with Tractabel. Stage 1 involves signing condensate Fuel Supply Agreements (FSA) with IPPs.

Stage 2 involves preparing the ground for an upgrade to LNG. Once the IPPs are operational, upgrading the project to LNG is easy, with a shorter gestation period.

By signing FSAs, BHP will have captured 100% market share for condensate - and by default - for LNG.