Petronet signs $ 2.5 billion deal with Tellurian, seeks supplies in Qatar
A first non-binding agreement for Petronet LNG Ltd to invest $ 2.5 billion in the Tellurian LNG project in Louisiana in exchange for gas supplies for 40 years has expired, the CEO of the Indian company said on Wednesday. .
The deal, which was signed during Prime Minister Narendra Modi’s visit to Houston in September 2019, has been touted as one of the largest foreign investments in the United States to ship shale gas overseas.
Petronet, India’s largest gas importer, has opened talks with suppliers such as Qatar to source natural gas in its liquid form (LNG) to meet the country’s growing energy needs, said its managing director and CEO AK Singh to reporters on a call.
The company’s long-term agreement to import 7.5 million tonnes per year of liquefied natural gas (LNG) from Qatar ends in March 2028, and the company has time until December 2023 to decide on it. extend, he said.
Petronet signed a memorandum of understanding on September 21, 2019 for the purchase of up to 5 million tonnes per year of LNG at the Driftwood LNG terminal offered by Tellurian Inc for 40 years. The deal came at the same time Petronet was making a $ 2.5 billion equity investment for an 18% stake in Driftwood.
“The MoU was not extended. To date, there is no MoU with us, ”Petronet Managing Director and CEO AK Singh told reporters on a call. The original pact, he said, has expired.
The September MoU called for the transaction to close by March 31, 2020, but the timeline was first extended to May 31, 2020 and then to December 31, 2020.
Asked about the reasons for not concluding the deal or not extending the MoU, Singh said it was not because of Petronet. “We haven’t received a request from their (Tellurian) side for an extension,” he said but declined to expand.
In November last year, the company’s chief financial officer, VK Mishra, said that LNG was available at a disposable price and that “there does not appear to be a need to invest in liquefaction terminals (which convert the gas to LNG) ”.
Petronet promoters had also questioned the merits of capital investment and foreclosure of such large volumes with a single supplier for a 40-year period.
To keep developers happy and to test whether Tellurian’s LNG would be competitive, Petronet put out a tender to buy 1 million tonnes per year of LNG for 10 years, officials familiar with the matter said. Tellurian was one of 13 suppliers who cited in the tender but did not meet pricing expectations. Singh said India needs suppliers who can meet user price expectations.
Some sectors are price sensitive, like electricity which can afford a gas price of no more than $ 5-6 per million UK thermal units compared to the current market rate of $ 10, he said. , adding that wherever LNG replaces liquid fuel, price is not an issue, but sustainability becomes an issue when it has to compete with renewable energy sources. LNG in the transportation sector could be an option as it can afford the current tariffs, he said.
“We are in talks with suppliers like Qatar for additional LNG volumes,” he said, adding that Petronet is increasing the capacity of the Dahej LNG terminal by 5 million tonnes, planning a new terminal on the coast is and that there was also spare capacity available at its terminal in Kochi. . Singh said demand for gas in India, which has been severely affected due to lockdowns imposed in several parts of the country to curb the second wave of COVID infections, is expected to rebound during this fiscal year.
Petronet has been successful in selling gas it imports on long-term contracts with the exception of one cargo (ocean load) which was postponed to June, but short-term or spot market purchases have been affected due to lack of demand, he said.
The company’s 17.5 million tonnes per year import terminal in Dahej, Gujarat operated at around 80% capacity in April / May and has now recovered to 87% during the current month and will hit pre-COVID levels later this year, he said.
The 5 million ton import terminal at Kochi in Kerala can only use a capacity of 1.5 million tons in the absence of pipelines to get fuel to consumers. NNNN