Lloyds List: Australia lines up $12.5bn India LNG export deal

Long-awaited Gorgon’Petronet agreement could see 2.5m tonnes per year shipped to Kochi, writes Tony Gray, Lloyds List
Published: Jan 04, 2007

AUSTRALIA is poised to become a major exporter of liquefied natural gas to India, with partners in the Gorgon project lining up a long-term deal reported to be worth $12.5bn.

India’s petroleum secretary MS Srinivasan said a 25-year deal would be signed in the next two months.

The contract for 2.5m tonnes a year would be channelled through Petronet LNG, a company promoted by Oil and Natural Gas Corp, Indian Oil Corp, GAIL (India), and Bharat Petroleum Corp.

‘We have concluded most of the agreements,’ the petroleum secretary said. ‘A formal agreement can be signed as early as March-end.’

Mr Srinivasan refused to disclose the price at which the LNG would be acquired, but sources in India suggested it was worth about $12.5bn.

The Gorgon’Petronet deal has been under negotiation for some time, with the participants initially hoping that it would be signed by the end of last year.

LNG deliveries from Gorgon are expected to begin in 2011.

Petronet LNG established India’s first import terminal at Dahej, Gujarat, and is building another terminal at Kochi, Kerala.

The Gorgon LNG is destined for the Kochi terminal, which will have a capacity of 2.5m tonnes a year.

Chevron-operated Gorgon is located about 130km off the northwest coast of Western Australia, and will comprise two 5m tonnes a year liquefaction trains.

Gorgon is structured to enable individual partners Chevron (50%), Shell and ExxonMobil (25% each) to secure markets for their own share of the project’s gas.

It is not clear at this stage whose gas will be sold to Petronet. But if the deal is concluded, it will be the Gorgon project’s second supply deal with India.

Shell has signed a preliminary agreement with Gujarat State Petroleum Corp covering long-term supplies of up to 0.5m tonnes a year for the Hazira import terminal.

Shell is also planning to use Gorgon gas to supply the Sempra’Shell Energia Costa Azul receiving facility under construction in Northern Mexico.

For its part, Chevron has signed separate heads of agreement with three Japanese utilities for the supply of a combined 4.3m tonnes a year.

India is a new market for Australia.

The long-established North West Shelf project is a major supplier to Japan, and also has customers in South Korea and China.

– The proposed Myanmar-India gas pipeline may be shelved, according to reports from India.

Myanmar is said to favour an LNG project to exploit gas finds in two Daewoo-operated blocks after finding bids for piping the gas to China, India, or Thailand ‘unsatisfactory.’

State-run Myanmar Oil and Gas Enterprise has called for bids for 3.5m tonnes of LNG a year from Daewoo’s A-1 and A-3 blocks.

If MOGE proceeds with an LNG project, an informed source said the Myanmar-India pipeline would ‘never come.’

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