Qatar gives positive signal to Petronet-LNG

Hopes are high that Petronet-LNG will secure more long-term LNG for its Dahej and upcoming Kochi terminals from Qatar-based RasGas. “Negotiations have begun!” confirms a source. “They are talking to each other regularly.” Petronet-LNG, we hear, wants an additional 5m t/y LNG for 20 years from RasGas, in addition to the 7.5m t/y long-term 25-year SPA signed in July 1999 for Dahej. During a December 16 meeting in Doha, an Indian team led by oil minister Murli Deora broached the subject with Qatar’s deputy prime minister Abdullah Bin Hamad Al-Attiyah.

In a significant departure from Qatar’s refusal of such previous requests, we hear Al-Attiyah this time agreed to consider Petronet-LNG’s request. “India has repeatedly asked Qatar for more LNG over the past two or three years,” says an industry source, “only to get turned down every time. But this time Qatar gave a positive signal!” Despite Qatar’s new attitude, it will first weigh several considerations before formally agreeing to sell more LNG to India. These include how much surplus LNG RasGas has available, what proportion it can safely commit to the Indian market and under what terms. Indian authorities ideally want a long-term contract. But will Qatar sell another 5m t/y to India in addition to the 7.5m t/y already committed? Wouldn’t it be wiser to spread its risk among other countries? According to an industry analyst, Qatar might this time be more ready to commit long-term LNG to India because US domestic production of shale gas is rising, hitting LNG imports. “Despite a severe winter in the US,” says this analyst, “gas prices remain low. Even going forward, I expect only a moderate increase.” Another gas sector source tells us that because of the shift in the US market and its lower gas demand, Qatar might have more than 10m t/y surplus LNG.

 NOTE: Petronet-LNG believes Qatar’s LNG surplus could be even higher at 15m t/y. Out of this, Petronet-LNG believes RasGas has sold 10m t/y to Singapore, South Korea, China and Japan. “The rest could come to India,” we hear. Dahej can take 2m t/y more right away, even without a second jetty, say some analysts. Separately, Dahej last month began receiving the second tranche of contracted Qatar LNG supplies. This tranche is 2.5m t/y while the earlier one was 5m t/y. Petronet-LNG’s newest and third LNG tanker Aseem docked at Dahej on January 4 with the first cargo of 154,800 cubic metres. “Aseem has been dedicated for second tranche cargoes from RasGas,” we are told. Aseem will bring about 36 to 38 second tranche cargoes every year to Dahej.


Source: Petrowatch
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