India's Fertiliser and Chemicals Travancore Ltd to Up Output as LNG Cost Falls
Fall in global LNG prices will help India's Fertiliser and Chemicals Travancore Ltd (FACT) boost output in 2016-17, reported Reuters.
The company plans to increase output by two thirds to a million tonne in 2016-17, company chairman Jaiveer Srivastava said, adding FACT resumed LNG imports in April after a gap of more than a year, buying at $7.79 per million British thermal units (Btu).
"We never thought, nor even dreamt, that we would get LNG at this rate," Srivastava told Reuters. Sharp fall in international LNG prices has resulted in dramatic drop in cost of the feedstock to produce ammonia for fertiliser production.
On Friday, state owned FACT issued a tender seeking 10.39 trillion Btu of LNG equivalent for delivery during the period Aug 24, 2016-Aug 23, 2017 for use at its Kochi plant. According to the tender document, bidders are also given the option of quoting for delivery ex-Petronet LNG Ltd terminal, Kochi basis.
Sharp jump in India’s LNG imports
India’s LNG imports have seen a sharp jump in April and May. The country imported 2,082 million metric standard cubic metres (mmscm) of LNG in May, up 43.4 percent on year, according to data published by Petroleum Planning and Analysis Cell (PPAC).
The cumulative import of 4,224 mmscm for the Apr-May, 2016 was higher by 44.4 percent as compared with the corresponding period of the previous year (2,925 mmscm).
India’s April LNG imports jumped almost 45 percent to 2,142 mmscm.
Cost of importing LNG has dropped sharply this year after New Delhi signed a revised long term contract with Doha. Qatar is largest supplier of LNG to India. Given the backdrop of low global LNG prices, Petronet LNG insisted on renegotiating its long term contract with RasGas. In December, the two parties signed a revised deal. The revised formula bases the price on a three-month average figure of Brent crude oil, replacing a five-year average of a basket of crude imported by Japan, with a rider that Petronet buys an additional 1 million tons of LNG annually. Qatar also waived off a $1.5 billion penalty against India for lifting less gas than agreed.
Cost of LNG that India imports from Qatar has slipped below $5 per mmBtu post signing of revised long-term deal.
Currently, there are four LNG terminals at Dahej and Hazira in Gujarat, Dabhol in Maharashtra and Kochi in the state of Kerala. Capacity expansion of Dahej LNG terminal is expected from 10 mtpa to 15 mtpa by end of 2016. Further, a firm plan is in place to augment another 2.5 mtpa capacity at Dahej.