GAIL India may look for new buyers for the imported natural gas from Qatar contracted to NTPC as the power major has not been able to utilise the regasified liquefied natural gas (RLNG) due to high cost.
GAIL officials said the Qatar regasified liquefied natural gas (RLNG) has a landed price of $12-13/mmBtu and a delivered price of around $20/mmBtu after including regasification and transportation costs.
A GAIL official said that there are takers for RLNG in other sectors such as fertiliser, auto, ceramics, refineries, who use more expensive fuel like diesel or naptha, that the company plans to approach.
NTPC sources said that they have refused to take the 2 million metric standard cubic metres per day (mmscmd) of RLNG as they are unable to find buyers for power at such high fuel prices.
Power at this price of gas will be well over Rs 10 per unit, making state utilities disinterested in buying power. The long-term contract between the two companies is valid till December 2019.
In order to avoid penalty for failing to meeting its contractual commitments, NTPC is said to be in talks with GAIL to help the gas utility find buyers for the 2 mmscmd of gas. When contacted an NTPC spokesperson said the firm considers GAIL as partners in progress and it would not like GAIL to suffer on any count.
?NTPC is very seriously considering the issue for an amicable resolution and is hopeful of finding a good business solution soon,? the spokesperson added.
Domestic gas is currently available at about a fifth of the cost of RLNG, and even after the new gas pricing formula kicks in next year, the prices will remain considerably lower than RLNG. Domestic gas from new exploration licensing policy (NELP) and KG-D6 gas fields come at a base price of $4.2 /mmBtu. ONGC’s C-series gas is sold at a base price of $5.25 per mmBtu, while gas from the Panna-Mukta-Tapti fields is priced higher at $5.60-5.70/ mmBtu.
Fuel costs represents NTPC’s largest expense, constituting 76.13% of its total expenses for fiscal 2013. The gas-based capacity of the company stands at 5,955 MW (includes 1940 MW under JV route ? RGPPL). Against the gas requirement of around 16.5 mmscmd to run its plant at 85% capacity (excluding RGPPL), the company is receiving just about 7-8 mmscmd of gas making its plant to operate at less than 40% of its plant load factor.
NTPC has arranged for the supply of RLNG through long and short-term contracts to meet part of its requirements.
The short-term RLNG contracts are agreed on a ?reasonable endeavors? basis with no obligation on NTPC’s part of such as ?ship or pay? or, ?take- or pay? and no supply or pay obligation on the part of the suppliers.
NTPC will require 16.39 million metric standard cubic metres of gas per day in fiscal 2014 to operate its directly owned gas- fired power stations at a plant load factor (which is a measure equal to the percentage of capacity actually utilised) of 85%.
GAIL has so far locked in around 6-7 million tonnes per annum (mtpa) of long-term gas contracts that will land in India from 2016-17. This includes deals for Gorgon gas from Australia and Cheniere Energy Partners from the US. Starting 2018-19, GAIL will also commence a 20-year deal with Russia’s Gazprom to buy 2.5 mtpa LNG. GAIL currently has a long-term contract with Qatar to acquire 7.5 mmtpa of gas.
The present installed capacity of NTPC is 41,794 MW (including 5,474 MW through JVs) comprising 23 NTPC stations (16 coal-based, 7 combined cycle gas/liquid fuel-based stations), 7 joint venture stations (6 coal-based and one gas-based) and 2 renewable energy projects.
