November talks with Gorgon to freeze LNG for Kochi

Vol 10, PW 13 (19 Oct 06) Midstream & Downstream

Petronet-LNG continues discussions with Australias upcoming 10m t/y Gorgon project to import LNG for its proposed LNG terminal at Kochi.

Talks are primarily with Exxon, which along with Chevron and Shell, are the three stakeholders at Gorgon. An industry source tells us critical discussions on the LNG purchase contract are scheduled to take place in Kochi for three days to 15th November.

The Kochi meeting will hopefully freeze the (LNG) Sale Purchase Agreement, we hear. Most of the formal talks have so far been between Exxon and Petronet-LNG but this time (Gorgon promoter) Chevron will also be formally present.

Chevron has a 50% stake at Gorgon while Exxon and Shell have 25% each. Presently, Petronet-LNG is talking to Gorgon for 2.5m t/y LNG for Kochi.

Most of this will come from Exxon but, as Chevron is the promoter of the project you must involve them in final discussions on the SPA. Shell will not be selling any of its 2.5m t/y LNG from Gorgon to Petronet-LNG, as it has committed this to other markets.

As Kochis eventual capacity will be 5m t/y, Petronet-LNG is on the look out for another 2.5m t/y from somewhere else. This could come from Phase-II of Gorgon or from Qatar, but nothing is certain now.

Separately, Bharat Petroleum has won its fight to get 40% - the biggest share - of the 2.5m t/y LNG that will be initially imported at Kochi. GAIL and Indian Oil will each get 30%.

BPCL has long complained that it should have the biggest share of Kochi R-LNG to compensate for receiving just 10% of the LNG imported at Dahej. More, BPCLs Kochi Refineries will also be one of the key customers of Kochi R-LNG.

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