India's Petronet eyes revised Gorgon LNG deal
NEW DELHI |
NEW DELHI Feb 12 (Reuters) - India's Petronet LNG is in talks to raise a deal for liquefied natural gas from Exxon Mobil's (XOM.N) interest in Australia's Gorgon project to 3.75 million tonnes, senior Petronet officials said on Tuesday.
India, Asia's third-largest oil consumer, faces a natural gas supply crunch with booming demand for the clean fuel far outstripping domestic supplies.
Last year, the Australian government gave environmental clearance for two LNG production lines for the Gorgon field.
But in December, project operator Chevron Corp (CVX.N) unveiled plans to add a third train so it can make more efficient use of the available workforce and generate greater revenue.
Each unit could generate 5 million tonnes of LNG per year, and increasing the project size to 15 million tonnes a year would raise Exxon's share to 3.75 million tonnes from 2.5 million.
Amitava Sengupta, director of finance at Petronet LNG (PLNG.BO), said the U.S.-based firm was now close to offering this revised total output to Petronet.
The two firms in September signed a draft agreement under which Petronet would buy 2.5 milion tonnes of LNG a year for 25 years.
Chevron owns a 50 percent stake in Gorgon, while Exxon and Royal Dutch Shell Plc (RDSa.L) hold 25 percent each.
"Additional volume was a big point of discussion, which now they have more or less agreed to give to us if the price is okay," Sengupta, who accompanied managing director Prosad Dasgupta for talks with Exxon in Australia, said.
He said Exxon wanted to sign a sale purchase agreement for LNG in the third quarter of this year if both sides can agree on a price. Gas supplies are expected to begin from mid-2013.
Dasgupta said the next round of discussions on pricing was expected to take place at the end of March or in April.
Petronet plans to bring Gorgon LNG through a new terminal at Kochi in the southern state of Kerala, which is expected to be commissioned in 2011.
Gas demand in India runs at around 179 million standard cubic metres a day, but domestic gas availability is only around 95 mmscmd.
Production is expected to rise to more than 190 mmscmd by 2009 after new gas fields come on stream.
Goldman Sachs estimates the share of natural gas in India's coal-dominated energy basket will double to 18 percent by 2015 and stabilise at 20 percent by 2025.
Petronet is in talks with Algeria, Oman, Egypt, Qatar and Trinidad & Tobago to agree long-term contracts as it plans to ramp up capacity at its Dahej terminal to 10 million tonnes by December 2008 from the existing 6.5 million tonnes.
The firm gets 5 million tonnes a year from RasGas under a long-term LNG deal with Qatar, and that will be raised to 7.5 million tonnes from 2009. (Reporting by Nidhi Verma, Editing by Mark Williams)
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