GAIL moves closer to securing LNG supplies for Dabhol

Vol 12, PW 2 (12 Jun 08) Midstream & Downstream

GAIL is moving a step closer to securing regular LNG supplies for the Dabhol receiving terminal in Maharashtra.

PETROWATCH learns that on May 27 GAIL issued its second notice inviting international companies to sign a one-off Master Spot Purchase Agreement (MSPA) for the supply of spot LNG cargoes at Dabhol, where the LNG receiving terminal should be ready by the end of this year or early next year. GAIL’s first notice in January met with limited success.

“Six companies responded by the March 31 deadline,â€‌ reports an industry source. “Five of them are companies who have a stake in LNG liquefaction facilities.

They also trade in LNG. One of them is a trader.

â€‌ Our source declines to reveal the identity of the interested companies, except to say GAIL is in the process of completing the paperwork that goes with signing a MSPA. “The process is at the first stage,â€‌ he adds.

“These companies have only just submitted the documents required by GAIL.â€‌ After scrutinizing what they have sent, GAIL has drawn up a long list of queries, which it has sent to all six suppliers, awaiting their reply.

By the end of this month (June) GAIL hopes to have answers to all its queries and sign the MSPA in July. In addition to short-term spot cargoes, GAIL is also pursuing efforts to secure long-term LNG supplies for Dabhol.

“GAIL was originally hoping the LNG receiving terminal would be ready by October or November,â€‌ we hear. “That has been pushed back to January now.

â€‌ But some observers think it might take longer. “Dabhol needs more time before it can receive LNG supplies,â€‌ says a source close to the project.

“More work is needed to complete the two LNG tanks and water has entered into the insulation of the third (incomplete) LNG tank. This will take time to repair.

â€‌ Without a breakwater, any LNG supplies to Dabhol will have to be made during periods of good weather.

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