Yahoo! News: Shell Offers To Sell LNG At Discount To Restart Dabhol Project Thursday October 27, 04:55 PM 

NEW DELHI, Oct 27 Asia Pulse - Royal Dutch/Shell, the world's third largest oil firm, has offered to sell liquefied natural gas (LNG) at a 20 per cent discount off the current naphtha prices to restart the beleagured Dabhol power project.

The government, which is looking at restarting the project by July 2006, has had little success in sourcing LNG to fire the 2,184 MW plant in Maharashtra at a maximum price of US $4.25 per million British thermal unit to produce electricity at Rs 2.70 per unit.

"Shell had earlier offered to sell LNG at US $6 per mBtu but they were unable to meet that commitment. Now they have offered to give gas at a price which is 20 per cent cheaper than naphtha (the alternate fuel for firing the plant)," Petroleum Secretary S C Tripathi said on Wednesday.

Naphtha is currently ruling at close to US$10 per mBtu and a 20 per cent discount would essentially mean LNG at US$7-8 per mBtu.

"Gas prices have firmed up and it is very difficult to get LNG at prices we are looking at," he said.

If LNG is sourced at a higher price, cost of generating electricity from Dabhol will also shoot up.

Tripathi said LNG suppliers in Australia, Malaysia, Qatar, Oman and UAE are quoting a price of about US$7 per mBtu.

Previously, the state-run GAIL India, which has been tasked with sourcing of fuel to fire the plant, had projected power from the plant to cost Rs 2.3 to 2.5 per kwh (unit) at ex-ship LNG price of between US $3.65 and US $4.25 per mBtu.

(PTI)

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