India is the world’s eighth-largest importer of LNG and the widening gap between demand and supply could mean imports rise as much as five-fold in the next decade. Separately, the overseas arm of Indian state-run explorer Oil & Natural Gas Corporation has showed “keen interest” in Russia’s Sakhalin-3 and other fields and is in “close talks” with Gazprom to jointly develop projects to produce LNG, the same government statement said.
Agencies

“The profit has been higher because we were able to regassify and send out more volumes,” he said, adding, Petronet’s Dahej terminal processed 2.62 million tonnes (MT) of LNG in the quarter as compared to 1.87 MT an year-ago. Balyan said Petronet plans to expand its Dahej terminal capacity to 15 MT a year from the current 10 MT per year by 2015.Also, the company is looking at an up to 5 MT a year terminal on the east coast at a cost of US $1 billion, he said. “The Board has approved a detailed feasibility report (DFR) for the terminal on east coast.” The terminal will take up to five years to be built, he said, adding, pre-feasibility report had thrown 5-6 locations, including Kakinada in Andhra Pradesh.

The DFR will prioritiese the locations, Balyan said, adding that the Dahej expansion will be partly funded by state-run gas utilities GAIL and GSPC, who have sought dedicated capacity in the terminal for importing their own volumes.

A 5-MT capacity terminal is coming up at Kochi in Kerala by the end of 2012. Balyan said Petronet is talking to countries like Qatar and Australia for long-term supplies. Petronet currently imports 7.5 MT a year of LNG from Qatar on a long-term contract. Besides, it has tied up for importing 1.5 MT on a two-year contract with Spanish company Gas Natural.

The company in all will get 22 cargoes from Gas Natural, 12 in 2011 and the remaining 10 in next year. Petronet got its first cargo under the contract earlier this year and it was priced around US $10.3 mBtu. Turnover rose 83 per cent to Rs 4,623.31 crore in the first quarter of 2011-12.
Agencies

“With the commissioning of facilities of the several operators of the country, indigenous gas production has increased, but the current production is decreasing and lower than what was earlier projected,” said Chaturvedi, who is also the chairman of Petronet LNG.

He said India’s current gas demand is around 179 million cubic meters a day (mcmd), while local supplies is less than 140 mcmd. India’s natural gas output declined 9.6 per cent to about 4.14 billion cubic metres in May from a year ago as output from the Reliance-operated D6 block in the east coast declined after touching about 60 million cubic metres per day.
Agencies

Officials at both the terminals were unable to dock the LNG vessels for the past few days, due to rough weather conditions off Gujarat coast that led to curtailment of gas supply to around 3,000 industrial units across the state.  “Gas supply to the industrial units was hit, but it has now resumed,” a GSPC official said.

“The regassification process of LNG has commenced at both the terminals-Dahej and Hazira-and the distributors would get their quota of natural gas supplies in due course of time,” another port official said, preferring anonymity. “Now, we hope to get regular gas supply soon. Supply to industry will be also be ramped up gradually and normal supply to units across Gujarat could resume soon,” a spokesperson of a City Gas Distributors (CGD) said. The gas supply to industrial units was curtailed by few CGDs including GSPC, due to shortage of gas owing to non-berthing of LNG carriers.
Agencies

 “There are three reasons for this higher profit. First, we have done more volume (of LNG imports and sales). Then, our regasification charge increased 5% and lastly, our internal efficiency improved,” he said. Petronet imports 7.5 million tonnes a year of LNG from Qatar on a long-term contract. Besides, it has tied up import of 1.5 million tonnes on a two-year contract with Spanish firm Gas Natural.

The company in all will get 22 cargoes from Gas Natural – 12 in 2011 and the remaining 10 in next year. Petronet got its first cargo under the contract earlier this year and it was priced around USD 10.3 per million British thermal unit. Turnover rose to Rs 3,985.96 crore in Q4 of 2010-11 fiscal from Rs 2385.45 crore in the same period a year ago.

Balyan said the company operated its Dahej import facility in Gujarat at its full capacity of 10 million tonnes a year in 2010-11 fiscal. Besides the long term imports from RasGas of Qatar, Petronet imported 9 cargoes from the spot market and leased out its terminal for import of another 11 cargoes by firms like state-run GAIL India Ltd. During this fiscal, the company plans to import 10 cargoes from the spot market, he said.

Petronet, he said, was seeking 2 to 4 million tonnes of additional LNG on a long term contract from Qatar. “Their (Qatar’s) team was here last month and we expect a response from them by May.”

The company, which is 50 per cent owned by state-run Indian Oil Corp, Bharat Petroleum, GAIL and Oil and Natural Gas Corp, will commission a 5 million tonnes import facility at Kochi in Kerala by next year end.

For Kochi, it has tied up 1.5 million tonnes of imports from Gorgon project in Australia and is looking to fill the remaining volumes through imports from countries like Qatar, he said. Balyan said net profit in the 2010-11 full fiscal was Rs 619.61 crore as against Rs 404.49 crore in the previous financial year. Turnover soared to Rs 13,197.28 crore from Rs 10,649.08 crore in 2009-10.
Agencies

Kochi terminal according to the company is the second terminal by Petronet LNG and one of the fastest terminals they have put in place in the stipulated time frame. The mechanical work of the terminal is expected to be completed by December 2011, and to be operational from March 2012.

Steel-maker SAIL chairman S K Roongta, GAIL finance director R K Goel and ONGC director-HR and bsiness development Ashok Balyan have also been identified as potential candidates for the post of chief executive officer and managing director of the country’s largest liquefied natural gas importer.

In all, 29 candidates have applied for the job and a search committee has shortlisted 10 meeting the eligibility criteria,” a source familiar with the development said. The search committee, which comprises representatives of the five promoter companies of PLL, is scheduled to hold interviews of the shortlisted candidates on 29 May.

While Balakrishnan is considered a favourite to bag the job, only Goel and Balyan have experience with gas sourcing — the primary job of PLL. After his unceremonious exit from IOC this February, Behuria is an advisor to PLL now. The post fell vacant after incumbent Prasad Dasgupta took early retirement. Dasgupta’s five-year term was to come to an end on 31 August and he was eligible for a two-year extension till he attained superannuation at the age of 65 in 2012. He, however, quit the job last month.

Petroleum secretary S Sundareshan, who is the chairman of PLL, constituted the search committee comprising representatives of the company’s promoters IOC, ONGC, GAIL, Bharat Petroleum and Gaz de France. PLL Independent director D P Roy is also in the committee, the source said. PLL director for finance & commercial A Sengupta, Imperial Energy CEO Ashok Verma, Hindustan Latex chairman and managing director M Ayyappan and projects & development India chairman and managing director R G Rajan are also in the race.

The post of MD & CEO of PLL carries a remuneration five times the salary of a PSU chairman. What is more, the retirement age at PLL is 65, whereas the retirement age at PSUs is 60 years. These are reasons why PSU heads superannuating this year have applied for the job, the source said.

Balakrishnan will reach superannuation on 31 July, while Roongta is due to retire on 31 May. Behuria did not get an extension of his tenure as IOC chief this February, though he was due to superannuate in 2012. The eligibility criteria for the job states that preference would be given to persons having oil and gas experience.
News agencies

Renjini Liza Varghese

The southern most Indian state is close to realising its dream of having a larger source of fuel cater to its industries. It is not that the fuel need is being met. But the dream of regaining the lost sheen of an industry-friendly state may be ratified when the Kochi LNG terminal commissions in 2012.

Kochi LNG terminal dominates the conversations, be it the state officials, the industry bodies (though a minimal presence) and even the common man. “It is a dream project which will rewrite the economics of the state completely,” said Kerala industry minister Elamarom Kareem. “This is one of the fastest projects which is being completed in record time in the state. Industries kept away from the state because of power shortage. But, now with the LNG terminal, we will be able to run the NTPC Kayamkulam to its full capacity of 1,200 Mw,” he added.

True, the state will go through a sea of change in its economy and the industry front once the terminal is commissioned. The major beneficiaries will be the power generation utilities followed by loss making PSUS like FACT, the largest fertilizer producer in South India. 

“The LNG supply will be a boon to the power sector of the state. The state is majorly dependent on hydro power and in summer faces shortage. To bridge the gap, the state depends on the central quota and the spot maket. However, this pinches the consumers and forces the state to cough out the extra bill. As no gas is available, the state is looking at converting the existing

diesel plants in Brahmapuram and the BSES plant near Kochi to gas based. The peak non-peak gap of 40 per cent can easily be bridged when the conversion of the two existing plants and the Kayamkulam supply comes in,” said electricity minister A K Balan. “Remember, Kerala is the first state in the country to have a fully electrified district. And we want to make every household accessible to grid power in another two years. As in any other state, the power demand is increasing year by year. Once the fuel is available, it will be easy for the state to attract investments in power generation,” he added.

This is the second terminal by Petronet LNG and if you take the company version at face value, this is one of the fastest terminals they have put in place in the stipulated time frame. The mechanical work of the terminal is expected to be completed by December 2011, and to be operational from March 2012.

 The 60 metric million standard cubic meter per day (mmscmd) of gas, which Reliance Industries Ltd (RIL) is pumping currently out of KG D6 has had a curious effect on the demand for liquefied natural gas (LNG) in the spot market in the country. The demand for LNG has suddenly dried up.

 However, most experts believe this is a temporary phenomena and demand will go up as more capacity is added in the power and fertilizer sectors. Apart from the availability of KG D6 gas, the other major problem the Indian gas market is facing is adequate infrastructure.

 Petronet LNG, the leading player in the LNG market has not bought any spot cargo since November 2009. The biggest consumer of LNG in the country, RIL which used to buy at least two LNG cargoes a month in the spot market has now stopped buying in the spot market. It is only importing two cargos through Shell’s Hazira terminal under long-term contract. Out of KG D6 production, RIL gets 2.34 mmscmd.

 Around 1.2 metric million tonnes of gas was being imported in the country every month before KG D6 started producing about 60 mmscmd but now it has come down by half.

As the basic output from KG D6 is being utilised by power and fertilizer plants, these companies are no longer ready to shell out US $8 or more for gas in the spot market.  With KG D6 gas available, they require additional gas only to improve plant load factors (PLF) in the power plants, said V Shunmugam chief economist, multi commodity exchange MCX. 

But this is likely to be a temporary lull. Once more power generation capacity and additional capacities in the fertilizer sector come up, the demand for gas will go up substantially, said Ajay Arora, practice head for oil and gas at international consultancy firm Ernst and Young.

As demand picks up in the near future, there is a strong case for Petronet LNG to go full steam ahead on its plans for setting up an LNG terminal at Kochi.  The response may not be as good in the case of Ratnagiri Gas and Power Pvt Ltd (RGPPL), which is also developing an LNG terminal at the site of its Dabhol power plant.

An analyst with another international consultancy firm believes that the problem has more to do with structural flaws in the Indian gas market than with demand.

He said due to the pool price mechanism for imported LNG, none of the suppliers – IOC, GAIL, BPCL can offer advantage of prevalent prices at particular point of time to their customers. This disincentivices suppliers from taking risks and maximising profits.

Inadequate infrastructure

Most of the gas imported in the country is either at Shell’s Hazira terminal or Petronet’s Dahej terminal and is transported through GAIL’s Hazira-Baroda-Jagdishpur (HBJ) pipeline. At present the pipeline is almost choked and there is hardly any room for pumping more gas through this pipeline.

In 2009-10, the gap between demand and the ability to transport the gas is expected to be around 65 mmscmd and it is expected to halve to 30 mmscmd by FY 13. But the gap between the demand and the pipeline capacity is not expected to be bridged in the medium term.

 In an emailed response a Shell spokesperson said, “The recent gas discovery from the Krishna-Godavari basin has a current recoverable reserve of 10 trillion cubic feet (TCF) and  1 TCF can fuel a 1000 Mw plant for 20 years. Thus all of the new discovery can fuel 10,000 Mw and with the target for capacity addition at 75,000 Mw, i.e., 15,000 Mw per year. This current find cannot meet even a year’s capacity addition in power, leave alone entirely address other additional industry use.”