Shirish Nadkarni
OGJ Correspondent
MUMBAI, Jan. 18 -- Royal Dutch Shell PLC's LNG terminal at Hazira has lost its sole customer, Gujarat State Petroleum Corp. (GSPC), but the company says the facility remains "fully operational."
Shell India Chairman Vikram Singh Mehta said, "Shell has fulfilled the terms of its contract with GSPC, and the contract has been completed. We are in discussion with a number of potential customers for short, medium, and long-term supplies of gas."
Mehta confirmed that the terminal had received its last consignment of LNG in October 2005 and that the port's tugs had been "temporarily redeployed." He said the LNG terminal "can receive an LNG consignment as and when required."
Asked why Shell had been unable to find other customers since opening the terminal 9 months ago, Mehta cited the "slow decision-making process" of Indian consumers.
"LNG continues to sell at a discount to liquid fuels that are still being used by certain consumers," he said.
While Shell's gas price exceeds the historic domestic gas price, Mehta said, "We think this is a temporary phenomenon and Indian consumers will soon be willing to pay international rates."
LNG prices exceeded $12/MMbtu last year, while government-controlled prices of domestic gas in India were $3.30-4.85/MMbtu.
Mehta said low administered prices have created a shortage of Indian gas. "We are trying to convince our prospective customers that natural gas is not only cheaper than liquid fuels, but that it is abundant and is environmentally friendly," he said.
Hindustan Petroleum Corp. has conducted due diligence for the acquisition of an equity stake in Shell's Hazira venture. Mehta asserted that Shell would remain operator and had no intention to sell the terminal.