India’s leading liquefied natural gas (LNG) receiving and regasification firm, Petronet LNG Ltd (PLL), is exploring opportunities to pick up equity in liquefaction terminals in West Asia and Australia to secure marketing rights for the gas exported from the terminals.
Rising demand: An LNG tanker in the Suez Canal. India imports around 2 million tonnes of gas a year, bought in the spot market.
The company has adopted this strategy after it failed to secure long-term gas supplies.
“A 10-25% equity is the ideal case that we want. We want to do this, as once you get equity participation in any such project, you also get the marketing rights for the gas from that terminal, which will be in proportion to the stake. We are looking at the upcoming liquefaction terminal projects in West Asia and Asia Pacific,” said a senior PLL executive, who did not wish to be identified.
The company has adopted this approach as its plans to source long-term gas supplies from Australia and Algeria have suffered a setback.
PLL intends to secure this gas supply as it also wants to enter the power generation sector by setting up a 1,200MW project at its Dahej LNG terminal and a second 1,000MW gas-based project at its proposed Kochi LNG terminal.
Ravi Mahajan, partner at accounting firm Ernst and Young, said, “This will be probably the first such step on the part of an Indian company. Conceptually, it is similar to taking equity stakes in upstream projects (oil and gas blocks).
In the LNG sector, a lot of long-term contracts have been firmed up. By taking equity in overseas liquefaction terminals, PLL can influence long-term and short-term contracts to come India’s way.”
With the economy expected to grow above 9%, the petroleum and natural gas ministry has estimated that India would need around 180 million standard cubic metres per day (mscmd) of gas in 2007-08. However, supplies have been around 81mscmd.
India imports around 2 million tonnes per annum (mtpa) of gas, bought in the spot market. Shell India Pvt. Ltd and PLL primarily source this.
The country has only two LNG regasification terminals—both in Gujarat. One is owned by PLL (capacity of 6.5mtpa) and the other by Shell India (2.5mtpa).