GAIL to sell im­ported LNG to Bangladesh

The Financial Express - - FRONT PAGE - Pranav Nam­biar

GAIL In­dia is in talks with the Bangladesh gover nment to lay an in­ter-coun­try pipe­line to ex­port gas to the fuel-starved neigh­bour. The pub­lic sec­tor gas util­ity plans to use the Hi­ranan­dani Group’s up­com­ing off­shore liq­ue­fied nat­u­ral gas ter mi­nal at Hal­dia, West Ben­gal, to im­port LNG from mul­ti­ple sources and sup­ply 3.6 mil­lion met­ric stan­dard cu­bic me­tres per day (mm­scmd) of the fuel to con­sumers in Bangladesh by ex­tend­ing the pro­posed 2,050-km Jagdish­pur-Hal­dia pipe­line.

GAIL is also work­ing on a deal with Pak­istan to of­fer it around 5 mm­scmd of LNG from the Dadri-Bawana-Nangal pipe­line. This in­di­cates that even as In­dian con­sumers like power and fer­tiliser units are vy­ing for gas link­age, many of them find­ing LNG un­af­ford­able, en­cour­ag­ing those in the LNG busi­ness like GAIL to look for mar­kets abroad.

LNG usu­ally costs four to five times more than do­mes­tic nat­u­ral gas, which is cur- rently sold at $4.2 per mil­lion met­ric Bri­tish ther­mal units (mmBtu). While spot LNG prices are now quot­ing around $ 18-20 per mmBtu, GAIL has locked in longter m LNG im­port con­tracts with the US at Henry Hub prices and Aus­tralian gas at 14.5% of cur­rent rul­ing oil prices. GAIL also has such con­tracts with fir ms in Rus­sia and Qatar.

Ac­cord­ing to GAIL di­rec­tor, (mar­ket­ing) Prab­hat Singh, the com­pany could utilise its pro­posed Ja­gadish­pur-Hal­dia pipe­line to con­nect to Bangladesh. “From the Ja­gadish­pur-Hal­dia pipe­line we will need to add another 50- km pipe­line to Bangladesh. A 100-km pipe­line will also be re­quired to con­nect the pro­posed LNG ter­mi­nal to the land, and a fur­ther 70-80 km to con­nect it to the Ja­gadish­pur-Hal­dia pipe­line. In to­tal, we might re­quire about 220 km of pipe­lines,” he said.

Bangladesh has been fac­ing gas short­ages for the past five years with a daily de­mand of 2,750 mil­lion met­ric cu­bic feet per day (mm­cfd). The na­tional oil com­pany Petrobangla is able to sup­ply only 2,300mm­cfd of gas, leav­ing a short­fall of 450 mm­cfd.

GAIL will also ben­e­fit as the im­ported gas might help the com­pany kick-start its stalled Ja­gadish­pur-Hal­dia pipe­line. RD Goyal, di­rec­tor (projects), GAIL, said that the Ja­gadish­pur-Hal­dia pipe­line has been kept on hold as it was meant to trans­port gas from Re­liance In­dus­tries' KG-D6 gas fields, which have now seen a big slump in pro­duc­tion. Also, GAIL is await­ing the re­vival of the de­funct fer­tiliser plants en route the Ja­gadish­pur-Hal­dia pipe­line like Kan­pur Fer­tiliser and Ce­ment, Fer­tiliser Cor­po­ra­tion of In­dia’s plants at Sin­dri and Go­rakh­pur and Hin­dus­tan Fer­tiliser Cor­po­ra­tion’s plants at Ba­rauni, Dur­ga­pur and Hal­dia.

Hi­ranan­dani Group firm H-En­ergy's LNG ter­mi­nal is ex­pected to be op­er­a­tional by the end of 2015 and is be­ing set up to sup­ply nat­u­ral gas to West Ben­gal, Jhark­hand and Bi­har and some north­ern states through the pro­posed Jagdish­pur-Hal­dia pipe­line. Kolkata, is only about 80 km from the Indo-Bangladesh bor­der at Pe­trapole, and fur­ther down is the gas grid of Bangladesh pass­ing through Jes­sore.

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