Petronet LNG gets first cargo from Australia project after 2-year delay

Mumbai | Updated: February 16, 2017 5:10:57 PM

After a delay of almost two years, Petronet LNG has received its first cargo of liquefied natural gas (LNG) from the Gorgon project in Australia where it entered into a sale purchase agreement with Exxon Mobil in 2009. The deliveries were expected by the end of 2014.

After a delay of almost two years, Petronet LNG has received its first cargo of liquefied natural gas (LNG) from the Gorgon project in Australia where it entered into a sale purchase agreement with Exxon Mobil in 2009. The deliveries were expected by the end of 2014.

The cargo has come to Petronet LNG’s Dahej terminal in Gujarat, as against the Kochi terminal in Kerala, where it was originally targeted to cater to the needs of power and petrochemicals plants in south India. However, the delay in construction of LNG pipelines connecting Karnataka and Tamil Nadu led the 5 million tonne per annum (mtpa) terminal to operate at only 25% of its capacity.

The deliveries were further delayed by a drop in prices of crude oil by over 70% in the last couple of years. The price of LNG is directly linked to the price of crude oil and the long-term contracts are benchmarked against the average of crude price during the period. The fall in crude price led to a drop in the spot price of LNG to below $4 per million metric British thermal unit (mmBtu), making the long-term contracts, entered at much higher rates, unviable.

(Written by- Vikas Srivastava)

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