1. Indian Oil to invest $4 bn in British Columbia project

Indian Oil to invest $4 bn in British Columbia project

To supply LNG to Ennore terminal starting 2020

By: | New Delhi | Published: July 14, 2015 12:40 AM

Government-owned Indian Oil (IOC) would invest up to $4 billion in the proposed natural gas and liquefied natural gas (LNG) project in northeast British Columbia on Canada’s west coast, said company chairman B Ashok.

Ashok told FE that till now, it has invested $1 billion in the project, where it had picked up a 10% stake in March 2014.

The chairman added that IOC has the option to increase the stake by another 10% in the project. However, the company is not considering to hike the stake at the moment. IOC targets to bring its share of 1.2 million tonnes of LNG per annum (which represents 10% of the LNG facility’s production), for a minimum period of 20 years to India.

Ashok said that the LNG terminal is likely to be ready by 2019-2020, when it plans to ferry the LNG from British Colombia to here. The gas would be brought to IOC’s proposed LNG terminal at Ennore in Tamil Nadu.

In 2015, IOC for the first time bought directly a spot LNG cargo from Excelerate. A second cargo from Vitol is expected to land on Indian shores by mid-July. Reuters said that the delivered price of the first LNG cargo was just above $7 per million British thermal units (mmBtu).

When asked what is the comfortable gas price for IOC to feed its refineries, Ashok replied, “The current spot prices are okay.” Currently, spot LNG prices hovers between $7-10/mmBtu. IOC plans to import 12 LNG cargoes in FY16.

IOC is taking the diversification route towards the gas business, which is poised to have potential customers in India. The timely move has come at a time when the Mahartana witnessed total sales in petrol and diesel growing by 11.2% and 1.7%, respectively.

Now, IOC is eyeing a bigger business in gas marketing to fulfill its endeavour to diversify and look for new avenues to boost earnings, as India has already become refining surplus. It is setting up a 5-mtpa LNG terminal at Ennore in Tamil Nadu, in addition to booking capacities at the upcoming Dhamra terminal and the existing Dahej terminalto import LNG.

Ashok said that at present, gas comprises 8% of the energy basket, which would go up to 15%, indicating there are potential opportunities.

IOC has also tied up with Japan’s Mitsubishi to buy 0.7 mtpa of LNG from the Cameron LNG plant in Louisiana under a 20-year deal, with supplies beginning in early 2018.

IOC sold 3.42 mt of natural gas in FY15, registering a growth of 6% year-on-year. The total sales to external customers stood at 1.78 mt of R-LNG, with addition of 12 new customers.

Coast to coast

* Till now, the state-run company has invested $1 billion in the project, where it had picked up a 10% stake in March 2014

* IOC has the option to increase the stake by another 10% in the project. However, the company is not considering it at the moment

* Targets to bring its share of 1.2 mtpa of LNG — 10% of the LNG facility’s production — for a minimum period of 20 years to India

* Currently, spot LNG prices hovers between $7-10/mmBtu. IOC plans to import 12 LNG cargoes in FY16.

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