Shell, GSPC to ink mega LNG deal

Gujarat State Petroleum declined to comment. Shell officials in India could not be reached for comment.

The source said Gujarat State Petroleum had negotiated the LNG contract with Shell’s Indian unit at about $4.50 per million British thermal units, for supply from 2010 onwards.

Shell has an annual share of 2.5 million tonnes of LNG from Gorgon, due to start shipping in 2010, and said last year that it would ship its entire share to a new import terminal to be built in northern Mexico to supply the US West Coast.

Chevron has committed most of its share of LNG supplies to Japanese firms, signing sales deals with Chubu Electric Power Co. for 1.5 million tonnes a year, Japan’s Osaka Gas Co. for 1.5 million tonnes and Tokyo Gas Co. for 1.2 million. That leaves it 800,000 tonnes of annual supply to market.

The source said Linda Cook, Shell’s executive director (gas and power), would sign the preliminary deal on Wednesday with Narendra Modi, chief minister of Gujarat, in Gandhinagar. He said Shell would also soon sign contracts with Malaysia’s Petronas and Total SA’s Yemen LNG Company for supply of LNG to its 2.5-million-tonne LNG terminal in Hazira in Gujarat.

After the expiry of its first contract with Gujarat State Petroleum last month, Shell’s Hazira terminal has been operating significantly below capacity.

Early this month, Shell admitted it had been approached by several parties interested in taking a stake in the terminal. While Total already owns a 26 per cent strategic interest in the terminal, Hindustan Petroleum Corp Ltd and Oil and Natural Gas Corp have expressed interest in picking up equity in the project.

— Reuters