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Petronet LNG signs 1st US deal, to import 4 mtpa for 20 years

In its first agreement to buy LNG from US, Petronet LNG, India's biggest liquid gas importer, said on Thursday that it has signed an initial pact with Houston-based United LNG to buy 4 million tonnes per annum (mtpa) of liquefied natural gas for 20 years beginning 2018.

'We have signed a preliminary agreement to import liquefied natural gas  from US,' Petronet director (Finance) R  K Garg said.

Petronet will sign the final agreement called the gas sale and purchase agreement after United LNG obtains approval of the US Department of Energy to export gas in its liquid form (LNG) to a nation with which Washington does not have a free-trade agreement (FTA).

'Detailed terms and conditions including price will be finalised later,' he said adding the price will be linked to benchmark Henry Hub rates.

Petronet will buy 4 million tonnes of LNG annually from United LNG's Main Pass Energy Hub in the Gulf of Mexico. United LNG is developing the Main Pass export terminal with a capacity of 24 million tonnes per annum, in association with Freeport McMoRan Energy LLC.

'They said the project will be ready by 2017-18 and we expect to begin imports sometime in 2018,' he said.

Petronet follows state-owned gas utility GAIL India Ltd's footsteps to lock in LNG supplies from US with price linked to the Henry Hub. GAIL in 2011 signed contract to buy 3.5 million tonnes per annum of LNG for 20 years from Cheniere Energy beginning 2017.

GAIL has also booked capacity to export another 2.3 million tonnes at US-based Dominion Energy's Cove Point liquefaction plant from 2017.

Petronet, Garg said, may also pick up a stake in United LNG's liquefaction facility in the Gulf of Mexico. The liquefaction plant converts natural gas into liquid at sub-zero tempratures so that it can be moved in ships.

The company currently buys 7.5 million tonnes a year of LNG from RasGas of Qatar on a long-term contract. The LNG is imported at its 10 million tonnes a year Dahej terminal in Gujarat.

It is also building a 5 million tonne capacity import facility at Kochi in Kerala this year and a similar capacity terminal at Gangavaram in Andhra Pradesh by 2016.    


HPCL BOARD APPROVES FORMING JV FOR RS 37,320-CR BARMER REFINERY


Hindustan Petroleum Corp Ltd (HPCL) has approved the incorporation of a joint venture company to set up Rs. 37,320-crore oil refinery and petrochemical complex in Rajasthan, the state-owned oil firm said in a statement on Thursday.

HPCL board in its meeting on24  April at Jaipur 'approved formation of a joint venture company for Rajasthan Refinery at Barmer', the statement said.

HPCL will hold 74 per cent stake in the 9 million tonne a year refinery with the Rajasthan government taking 26 per cent. The unit is planned to go on stream in four years.'This approval for formation of joint venture between HPCL and Government of Rajasthan, by HPCL Board, is yet another milestone decision which shall further speed up the process of setting up 9 million tonne refinery at Barmer,' it said.

The refinery, which will fulfil nearly a decade-old demand of the state, will run on crude oil from neighbouring oilfields of Cairn India. Half of the crude oil requirement at the proposed refinery will come from the Barmer oilfields of Cairn and the rest will be imported.Besides taking 26 per cent stake, the state government has given in-principle approval for providing an interest free loan of Rs. 3,736 crore per annum for 15 years from the date of commercial production.The state government has also assured continuous supply of 28 MGD (million gallons per day) of water for the project from Indira Gandhi canal and about 3,500 acres of land for refinery, terminal and township near Leelala area in Barmer.Originally, state-owned ONGC which owns 30 per cent interest in the Barmer oilfields of Cairn India, had in 2005 committed to building the refinery but later it started soft-peddling the project.Last year, HPCL entered the fray and has proposed to take 51 per cent stake in the project. ONGC, which originally had the authorisation from the government for processing the Barmer crude at the proposed refinery, too is now keen to take a stake in the project.

The Rajasthan government is acquiring about 926 hectares of land for the project in which Engineers India Ltd too will take a small stake.The refinery will process crude oil produced in Rajasthan as well as Arab mix crude. Cairn India, which holds 70 per cent interest in the fields, currently produces about 175,000 barrels per day oil (8.75 mt a year) from the Rajasthan fields and has potential to go up to 300,000 bpd (15 mt).

Vedanta Resources too is interested in taking a small equity of 2-3 per cent in the project.
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