Coal News We love to talk!

MAR 04 2013

Probe Rs 27,000 cr lossin Petronet deal: Former Secretary

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 04th MAR 2013

A Rs27,000 crore loss caused by an alleged change of contract by a Qatari companysupplying liquid gas (LNG) to Petronet LNG needs to be probed, former Secretaryto Government of India E A S Sarma has demanded.

Sarma ina letter to the Prime Minister's Office sought a CBI probe in the role of officialsof Oil Ministry and Petronet LNG Ltd in allowing RasGas of Qatar toallegedly violate the contract for supply of 7.5 million tonnes per annum ofliquefied natural gas (LNG).

He wanteda probe into the issue of how Petronet, whose Chairman is Oil Secretary,quietly switched to buying lean gas, which can only be used as fuel, instead ofrich gas that can also produce petrochemicals and cooking gas (LPG).

As perthe contract, Qatar was to supply 7.5 million tonnes of rich gas containingcompounds like propane and butane from which LPG and other petrochemicals canbe produced.

WhileRasGas gave rich gas in the first tranche of 5 million tonnes beginning 2004,it "violated the contract and started supply (the remaining) 2.5 milliontons of 'lean' gas without any corresponding change in price of LNG, causing aloss assessed at Rs 27,000 crore over the life of the contract," he wrote.

Lean gasis the stripped of propane and butane. "Perhaps, Qatar had offered to compensatePetronet for the loss but some intermediary had deprived the public exchequerof the corresponding benefit," he wrote.

PetronetLNG, which is majority owned by state-owned oil companies, had in 1999 signed acontract with Qatar's RasGas to buy 7.5 million tonnes a year of natural gasthat has been cooled to liquid form (LNG) so that it can be shipped.

Thecontract was for import of 5 million tonnes of LNG at Petronet's Dahej terminalin Gujarat and 2.5 million tonnes at its Kochi facility in Kerala. All of the7.5 million tonnes of LNG to be supplied by RasGas was supposed to be rich gas,which contains compounds like ethane, propane and butane that are buildingblocks for petrochemicals and LPG.

RasGasbegan supplies of 5 million tonnes a year of rich- LNG at Dahej in 2004. Butsupply of the remaining 2.5 million tonnes could not start as construction onKochi terminal was delayed.

In 2005,Petronet entered into negotiations with RasGas to advance the tranche-2 volumesof 2.5 million tonnes. They proposed to buy the entire 7.5 million tonnes ayear of contract supplies at Dahej.

Petronetsigned a revised deal in 2006 wherein it agreed to take 5 million tonnes ofrich gas and for the rest agreed to RasGas condition that the rich gas will besupplied only on best endeavour basis rather than as contractual commitment.


Gujarat Kerala Gas Oil Ministry Oil Central Bureau of Investigation Liquefied natural gas Petronet LNG Ltd RasGas of Qatar Liquefied Petroleum Gas India

Related News

  • Government to hike Cairn's Ravva field gas price by 20 per cent  Read more
  • Price Gas Logically,Set Up a Market  Read more
  • Coal shortage keeps 11,500 MW of thermal power generation capacity idle  Read more
  • HPCL to rework Rajasthan oil refinery terms  Read more
  • HMEL to shut Bathinda refinery from mid-March to raise its capacity: report  Read more
  • Coal India slows production and waits for demand to pick up  Read more
  • IOC may hike fuel prices in UP if state doesn't scrap entry tax  Read more
  • Coal India misses August output target by 3.8 per cent  Read more
  • India to seek concessions in oil contracts, says Pradhan  Read more
  • Essar Power Transmission likely to be sold to Adani Group; deal may be valued at Rs 1,800 crore  Read more