TOTAL AND THE PROBLEM OF EXCLUSIVITY

Vol 3, PW 5 (31 Mar 99) Midstream & Downstream
     

As western banks fall over themselves to get a slice of the LNG action in India, promoters are laying down ever stringent conditions.

In the last issue of Petrowatch, we reported how Mobil complained about a conflict of interest at ABN Amro, financial adviser to two rival projects by Enron and Petronet-LNG. Now this report learns Total is trying to avoid similar problems with Chase Manhattan Bank for its LNG project at Trombay near Mumbai, in a 50-50 joint venture with Tata Electric Company (TEC).

Talks between Chase and Total have stalled on an Exclusivity Clause. Total - reeling from, "a bad experience in Yemen" - wants Chase to work exclusively on its LNG project and with no other company supplying LNG to India.

Chase is unhappy with the proposal. The bank feels by accepting the Exclusivity Clause it will cut itself out of one of the most exciting growth industries in India: LNG.

In Paris, meanwhile, Total is moving ahead with plans to tie-up its LNG supply to Trombay. Phase I of the project will receive 3m tonnes a year (t/y), rising to 6m t/y in Phase II.

"The LNG will come from a liquefaction plant where Total is a partner", said a source in Paris, "It may be a mix of supplies from various sources or a supply from one single source". Total has equity interests in the following LNG consortia: Adgas (Abu Dhabi), Qatargas (Qatar), Oman LNG (Oman), Yemen LNG (Yemen), Bontang (Indonesia).

As you would expect, the Indian side is moving much, much slower. Despite clearance from the Foreign Investment Promotion Board (FIPB), Total is yet to receive the go-ahead from environmental and port authorities.