NEWS
India debates pricing of Shell's Hazira LNG
Delhi, Aug 10 (LNG journal)
- Royal Dutch Shell's Indian unit has reportedly offered to supply liquefied natural gas to India's power sector at a price of $6.1 per million British thermal units (mmbtu) from its Hazira terminal in the north-west state of Gujarat.
Shell's Hazira receiving terminal started up in April this year when it took delivery of its first cargo from Australia 's North West Shelf liquefaction project, in which Shell has a 22 percent stake.
This Indian price is for regassified LNG and is inclusive of transport costs, but does not account for taxes and duties. Shell India 's price is the highest being offered to the nation's power sector and compares with the delivered price of Qatar LNG at $4.42 per mmbtu, the Financial Express reported, citing government officials.
The first phase of a 5 million tonnes per annum (mtpa) delivery contract from Iran is also priced lower at around $5.22 per mmbtu, with the LNG also re-gassified, the report added. In June, Iran and India signed an LNG contract for a 25-year term, although the Iran deliveries do not begin until 2009.
Referring to the Shell India pricing, the report said that after including the customs duty element of 5 percent and sales tax of 12 percent, the delivered price would be close to $7 per mmbtu.
Hazira is a joint venture between Shell, which holds 74 percent, and France 's Total, a 26 percent shareholder. The facility is capable of receiving up to 2.5 mtpa, and has future expansion potential up to 10mtpa.
NG pricing in the Asia Pacific market is modeled for the Japanese market, the world's largest LNG consumer. LNG prices are typically indexed to the weighted average price of Japanese crude imports, referred to as the "Japanese Crude Cocktail (JCC)", expressed in US dollars per mmbtu, according to Shell.
