Congested pipelines and D6 gas hit Dahej spot LNG

Vol 13, PW 8 (24 Sep 09) People & Policy

Spot LNG imports to Petronet-LNG’s terminal at Dahej have dwindled to a trickle over the past six months ever since D6 gas began flooding the domestic market, completely filling the 2800-km HBJ pipeline from Hazira in western India to Jagdishpur in northern India.

However, Shell and Total are not facing any such problem at their Hazira LNG import terminal, thanks to a smart decision to focus on the Gujarat market (See below). Before D6 gas started flowing on April 1, the 10m t/y terminal at Dahej used to receive two to three spot LNG cargoes a month, as Petronet-LNG’s gas wholesalers GAIL, Indian Oil and BPCL met demand from fertiliser companies that needed to bridge the gap between contracted supplies of subsidised domestic gas and what they actually received.

But GAIL has not been buying any spot LNG cargoes for about four months, according to a GAIL source, who says “the spot market has gone coldâ€‌ for some time now. “Between 60% and 70% of spot LNG customers used to be fertiliser companies,â€‌ says this source, adding that the arrival of ample quantities of D6 gas (30m cm/d) has completely met the shortfall faced by fertiliser companies for now, and has also filled up the GAIL-owned HBJ pipeline, which can take a maximum 70m cm/d.

In addition, the two other gas transmission pipelines from Dahej are also completely full of D6 gas so there’s just no room to transport any spot LNG. These are the Dahej to Vijaipur pipeline, which is 610-km long and has a capacity of 20m cm/d and the 576-km Dahej to Dabhol pipeline passing through Uran, which has a 12m cm/d capacity.

Our source also lets us know that demand for spot LNG is also suffering because supplies of subsidised gas from ONGC’s Bassein field offshore-Mumbai are up by about 2m cm/d for the last two or three months. GAIL expects to import one spot cargo next month at Dahej, while BPCL, which says it has not imported any spot LNG for about a year now, sees no scope for another year.