New Delhi: Oil and gas firm Spice Energy Ltd has locked up long-term crude, gas and coal supplies with BP Plc. and two Indonesian firms to fuel its planned energy projects and hedge against market volatility, its chief executive said.
Cals Refineries Ltd, a part of Spice Energy, has signed a deal with BP for up to 100,000 barrels per day (bpd) of crude for its proposed 96,000bpd refinery in eastern India, Ravi Chilukuri said on Thursday.
Tanking up: A BP tanker outside Ineos Group’s Grangemouth refinery in Scotland. Spice Energy has signed a deal with BP for up to 100,000bpd of crude for its proposed refinery in eastern India.
“The nameplate capacity will be 4.8 million tonnes (mt) and it will be able to process up to 5mt. They (BP) will supply 100% of the crude...for 10 years,” he said.
Cals Refineries last year bought a standing refinery from German firm Bayernoil and plans to reconstruct it in West Bengal, with operations beginning in the first quarter of 2010.
Chilukuri said BP would supply a mix of heavy and light crude in an equal ratio, and the two firms would finalize which grades would be delivered within two weeks. BP has agreed to buy 65% of the refinery’s throughput at market prices, he said. The plant will produce Euro-IV compliant auto fuels and other products.
“The other 35% will be going to cement firms and other industries within a range of 10-15km,” Chilukuri added.
Spice Energy aims to double the refinery’s capacity to 200,000bpd by the first quarter of 2011. It also plans to set up a 2.5mt a year liquefied natural gas (LNG) terminal by 2011 near its refinery, and has signed a deal with Indonesia’s PT Pertamina to secure 1.6mt of LNG a year for 15 years.
“The delivered price of LNG would be at a discount to Henry Hub prices (the pricing point for natural gas futures contracts traded on the New York Mercantile Exchange). It will be less than $10 (Rs432) per mBtu (million British thermal units),” he said, adding 900,000 tonnes would be sourced through spot markets.
Spice Energy has also tied up 6mt of coal annually for its proposed 1,000MW project in Tamil Nadu. The deal will run for 20 years. Indonesian miner PT Tambang Batubara Bukit Asam Tbk will feed the project, scheduled to be completed by 2011, with 6,300 kilocalorie coal at a price 5% less than prevailing coal indices at the time of delivery.