Shell R-LNG price from Granosa cargo under scrutiny

Vol 12, PW 16 (15 Jan 09) Midstream & Downstream

Shell has categorically denied market speculation it is â€کprofiteering’ from the sale of R-LNG from the latest spot cargo to arrive at the Hazira LNG terminal, which it jointly operates with Total.

Rival gas marketing companies and customers say Shell’s attractive $1.48/mmbtu profit margin from the sale of gas brought to India by Golar-owned LNG carrier Granosa on January 8 is akin to â€کprofiteering’ because it coincided with the nearly week-long shutdown of rival Petronet-LNG’s Dahej terminal and supply disruption due to a strike by officers at state-owned oil companies. “Shell does not â€کprofiteer’,â€‌ counters a senior Shell spokesman, contacted by this report.

“Our selling price is based on our purchase price, which is very competitive.â€‌ On January 8, Granosa berthed at Hazira carrying LNG equivalent to 80m cubic metres R-LNG from the North West Shelf liquefaction facility in Australia, where Shell has a 16.67% stake.

Many people expressed surprise when GAIL director marketing BC Tripathi was reported saying the Shell paid $9.06/mmbtu. They were even more amazed when he added that Shell sold 50m cubic metres of gas to GAIL at $11.70/mmbtu before Granosa berthed.

“Was the price announcement deliberateâ€‌ asks an analyst. “Usually a buyer and seller would sign a confidentiality agreement.

â€‌ GAIL supporters say it bought the gas in a genuine effort to meet a shortfall anticipated from the planned shut down of Petronet-LNG’s terminal at Dahej from January 7 till January 12. Others say Shell’s action was far from noble.

“Shell got a chance to make money while Dahej gas was out of the market,â€‌ he said, “and they did.â€‌ When asked if last week’s strike by officers of state oil companies helped, the Shell spokesman added: “I do not have a crystal ball.

Buying a cargo is routine and it so happened that the strike came at the same time.â€‌