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Shell, PLL not to bid for RIL gas tender

May 11, 2004 14:20 IST

Royal Dutch/Shell and Petronet LNG Ltd are unlikely to bid for Reliance Energy's mega tender to source natural gas/LNG for its 3740 MW gas-fired power project at Dadri in Uttar Pradesh even as the Ambani-promoted Reliance Group firm postponed the last date of bidding to May 25.

"The bid date of April 9 was postponed to May 25 as most of the potential bidders said they were busy finalising price bids for a similar gas/LNG supply tender of National Thermal Power Corporation," sources said in New Delhi.

NTPC's tender for 3 million tonnes of LNG closes this week.

While Petronet LNG, the country's maiden LNG import firm, says it does not have surplus LNG to supply the Dadri power project in 2006, Shell sees the Dadri plant as a "paper project."

There is also the issue of Reliance, with its huge gas field on the east coast, being one of the competitors for supply to the Dadri plant.

Besides Reliance Industries' D6 gas field in Krishna Godavari, other firms planning to bid for the tender include the state-run GAIL (India) Ltd, Petronas of Malaysia and Yemen LNG.

Reliance EGen Ltd, a special purpose vehicle floated by REL for setting up the Rs 11,000 crore (Rs 110 billion) power plant, had sought 18 million standard cubic metres per day of natural gas or regassified LNG beginning June 2006.

"REGL may consider procuring the natural gas from multiple sources in a cost-effective manner to meet its fuel requirements," the tender says.

But Shell officials say Reliance is "not serious" about sourcing natural gas/LNG for the project from outside and has initiated the exercise only to discover price of its competitors.

"This is nothing but a price discovery mechanism. They want to know at what price others are selling LNG and then they will price their natural gas from Bay of Bengal at slightly lower rates," they said.

As per the New Exploration Licensing Policy, under which Reliance Industries was awarded the right to explore the D6 block off the Andhra coast, the operator has to decide the price of oil and gas, even for internal consumption, at an arms length principle as the governments gets a share from the revenue proceeds.

"This (the tender) may be how it is trying to arrive at the arms length price of the natural gas it will want to use in its power plant," they added.

REGL, in its tender, had asked suppliers of regassified LNG to detail the status of gas production/liquefaction and regassification projects along with the proposed routing of the gas to the Dadri project.

The Dadri plant, about 45-km from Delhi, representing the world's largest gas-based generating capacity at one single location, would act as a regional plant and sell power to the power-starved northern region of the country, particularly Uttar Pradesh and Delhi.

The first phase of the project is expected to come on-stream by June 2006.

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