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GAIL signs contracts for LNG sales
Himangshu Watts in New Delhi |
April 02, 2003 17:41 IST
India's biggest gas marketing firm, GAIL India Ltd, has found its first customers for liquefied natural gas because of an expected fall in the price of gas, the company's chairman said on Wednesday.
Cash-strapped power and fertiliser firms, which buy 80 per cent of the natural gas sold in India, want LNG at a price of $3-3.5 per million British Thermal Units, which is about $1 less than the initial estimates of the price of LNG from Qatar.
"We have already signed some contracts. We have got customers and you have to take my word for it," Prashanto Banerjee told reporters but did not give details.
GAIL's announcement comes weeks after British gas and oil producer BG Group Plc, which sees India as one of its core markets, said it would offer India cheap LNG from Iran.
Royal Dutch/Shell is also setting up an LNG terminal in India, which produces only 65 million cubic metres or 2.3 billion cubic feet of gas a day, less than half the domestic demand.
Banerjee said GAIL, the main distributor of LNG from Qatar's Ras Laffan LNG Co, had found customers as the cost of liquification, regassification and local distribution was being reduced.
"We are tightening our belts. The promoters are tightening their belts and we have reasons to believe some amount of belt tightening will have to be undertaken by Ras Laffan also."
Ras Laffan LNG Co will start shipping five million tonnes of LNG a year to India's Petronet LNG, a firm promoted by state-run energy companies including GAIL.
LNG suppliers are also in talks with India's National Thermal Power Corp, which generates more than 20 per cent of India's power output of 100,000 MW.
NTPC, a profitable company being wooed by almost a dozen LNG suppliers, has asked for LNG at a fixed price of $3 per million BTU, and is expected to finalise a contract for 20 to 25 years in the near future.
Gas consumers are also keenly watching the development of gas fields in the Krishna-Godavari basin in southeastern India, where Reliance Industries found gas reserves of more than seven trillion cubic metres.
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