LNG for Dabhol plant may come from Indonesia, Qatar: Report

India may source liquefied natural gas (LNG) from Indonesia and Qatar for restarting the beleaguered $2.9 billion Dabhol power plant, Hindustan Times reported in its Saturday edition.

GAIL, which has been mandated for sourcing LNG for the Dabhol plant, is tapping Indonesian state firm BPMigas' Bontang plant, which has spare liquefication capacity of 2.3 million tonnes per annum, a GAIL official said.

Qatar too has agreed to consider the supply of 0.5 to 1 million tonnes of LNG, beginning next year, to meet the needs of 2,184 MW Dabhol plant in Maharashtra.

India is making all efforts to revive the project with GAIL responsible for LNG terminal completion and LNG sourcing and NTPC for running the power plant. Preliminary indications are the 740 MW Phase-1 (0.5 million tonnes per annum LNG requirement) may be commissioned in 2006 and will be fully operational by 2007 (2.1 mn tonnes per annum LNG requirement).

GAIL has also received 'in-principle' approval from Oman and Abu Dhabi, DPC's original LNG suppliers, for supply of feedstock, the official said.

"We have ensured the LNG contract signed by Enron (DPC's original promoter) with Oman LNG Ltd is still legally valid," he said.

Enron had contracted 1.6 million tonnes of LNG from Oman and 0.5 million tonnes from Abu Dhabi, but it could not import it as the Dabhol plant shut down following a payment dispute with its sole customer Maharashtra State Electricity Board.

"We are in talks with Abu Dhabi Gas SPA and Oman LNG LCC for sourcing LNG," the official said adding ADGAS was willing to supply 0.7 million tonnes per annum from April 2006 with all provisions of contract with Dabhol intact. "Only price and ex-ship issues would be re-negotiated."

Since Enron did not take supply of LNG, the fuel was being sold in spot market and Oman was close to committing half of the volume contracted by Enron to Japan.

"We can source LNG from Australia or Yemen if things do not materialise with Oman," he said.

During a visit to Indonesia last month, GAIL was informed by BPMigas that it was keen on diversifying its consumer portfolio by including India as a LNG customer. GAIL has already submitted a proposal so that BPMigas could take approval from its marketing board and commence negotiations.

However, to supply LNG from Bontang plant, BPMigas will have to persuade Total, Unocal, BP, ExxonMobil that hold production sharing contracts, to scale up upstream supplies and commit the same for liquefaction, the official said.

GAIL has sought diplomatic initiative to take up the issue with the Indonesian government, request BPMigas to ask the companies to scale up their upstream production and enter into a long term supply contract for the Dabhol project.(*)