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INTERVIEW-UPDATE 1-Petronet seeks more LNG to sate hunger

* Petronet looking to buy a further 9mtpa of LNG by 2012

* Negotiating with InterOil to buy its entire LNG output

* Plans to go upstream, keen to build LNG plant in Australia

PERTH, Aug 11 (Reuters) - Petronet LNG PLNG.BO, India's biggest gas importer, has a huge appetite for gas and is still looking to buy a further 9 million tonnes of liquefied natural gas a year by 2012, amid a planned expansion of its LNG import terminals, a top company official said on Tuesday.

To secure supplies, Petronet is in talks to buy the entire output of Canadian Interoil's IOC.N proposed LNG project in Papua New Guinea, while it is also looking to buy more LNG supplies from the ExxonMobil-led XOM.N LNG project also in Papua New Guinea, besides Chevron's Gorgon LNG project in Australia.

“We are looking to buy the entire output in the first phase of InterOil’s project. That’s the strength we bring on the table, because then InterOil won’t have to go around the world to find customers,” Petronet Managing Director Prosad Dasgupta told Reuters in an interview at the LNG World conference.

Apart from discussions to buy all of InterOil’s LNG output, Dasgupta said the firm was also in talks with InterOil, and other firms, in Papua New Guinea to acquire stakes in gas fields.

InterOil, which is in the process of selling a stake of up to 35 percent in its LNG project in Papua New Guinea, said on Monday it expected the sale to be completed by year-end, adding that there has been strong interest from Asian utilities. [ID:nSYU006988]

InterOil’s LNG project is targeting a production capacity of between 3.5 million and 5 million tonnes a year, with first LNG shipments in 2014.

Dasgupta added that the firm was in talks with Exxon to buy gas from the first phase of the Papua New Guinea project, commonly known as PNG LNG. But stiff competition for the gas from other North Asian buyers had made the terms unattractive to Petronet.

“We’re now in talks to buy gas from the second (production) train,” Dasgupta said, adding that the unit had a capacity of 3.3 mtpa.

Despite its big appetite for gas, Petronet is less keen to buy LNG from other Australian LNG projects that plan to use coal seam gas as a feedstock, Dasgupta said, adding that higher freight rates and more expensive compression costs made such projects less attractive.

Petronet, which is currently ramping up the capacity of its two LNG terminals to 17.5 million tonnes per annum (mtpa) from the current 10 mtpa, has so far contracted about 7.5 mtpa of LNG from Qatar’s Rasgas project and 1.5 mtpa from Exxon for the Gorgon project in Australia.

GOES UPSTREAM, EYES AUSTRALIA’S KIMBERLEY LNG HUB

Apart from the acquisition of stakes in gas fields in Papua New Guinea, Petronet says it also plans to go upstream in Australia and is keen to build its own LNG plant at the Western Australian government’s proposed Kimberley hub.

Dasgupta said the company was looking at either sourcing the gas that the Western Australian government had set aside for domestic supply, or through farm-in arrangements for gas fields with total reserves of about 5-7 trillion cubic feet (tcf) gas.

Such volumes of reserves would be able to support a 5-7 mtpa liquefaction plant for a 25-year period, which it plans to serve as an independent source of energy supply for India and curb the volatility in delivered gas prices. (Reporting by Fayen Wong; Editing by Clarence Fernandez)

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