Petronet LNG Limited is expected to deliver liquefied natural gas from its Dahej terminal at Rs 6,567 per million standard cubic metres (mscm), provided the international price of crude remains at $16 a barrel.

However, if crude prices rule at $20 a barrel, the Dahej LNG is expected to cost the consumer Rs 7,706 per mscm. At $24 a barrel, the delivered price will be Rs 8,845 per mscm.

According to the petroleum ministry's preliminary estimates, the delivered price of Dahej LNG (in British thermal units) would vary between $3.39 and $4.57 per million British thermal units (mmbtu) if crude prices fluctuate between $16 and $ 24 a barrel.

The petroleum ministry is of the opinion that even at this price LNG will be 20-25 per cent cheaper than naphtha. It may thus replace naphtha in the power, fertiliser and petrochemicals sectors.

Also, compared with liquid fuels, LNG is fuel efficient and environment friendly. Therefore, at this delivered price, LNG might replace liquefied petroleum gas, petrol and diesel in the domestic fuel and transport sectors, the ministry said.

A study also compared the delivered price of the Dahej LNG--which is expected to range from $2.92 to $4.04 per mmbtu depending on the international price of crude--to prices of the fuel in other countries.

During January-June 2002, the price of LNG was $4.12 per mmbtu in Japan, $4.09 per mmbtu in Korea and $3.46 per mmbtu in France.

The commercial supply of LNG from Dahej is scheduled to begin in April 2004.

The ministry said work on the Dahej LNG project was progressing on schedule and around 75 per cent had been completed by March this year.

The engineering, procurement and construction contract for the project was awarded in December 2000.

Petronet has signed an agreement for the transportation of 5 million tonnes per annum (mmtpa) of LNG with a consortium led by the Mitsui OSK Lines.

The ships are being constructed at the Daewoo shipyard in Korea. The first ship is expected to be delivered by December 2003 and the second one a year later.

Cost-effective alternative

• The delivered price of Dahej LNG would vary between $3.39 and $4.57 per million British thermal units (mmbtu) if crude prices fluctuate between $16 and $ 24 a barrel.
• At this delivered price, LNG might also replace liquefied petroleum gas, petrol and diesel in the domestic fuel and transport sectors.