Indian Oil Corporation will not sign any long-term fixed-price LNG supply deals according to the company’s director (finance) Arun Kumar Sharma.
Sharma told The Economic Times that, based on lessons learned from Petronet LNG which is struggling to sell on the expensive LNG further to its customers, IOC will not sign any long-term deals with a fixed price but only for a quantity of gas.
He added that the company intends to ensure customers are not affected by the fluctuating prices.
The oil price drop had severely affected Petronet LNG that has a long-term supply deal in place with RasGas fro Qatar for 7.5 million tons of liquefied natural gas per year. Current spot prices are close to 50% lower than that of what Petronet pays to RasGas.
IOC, however, plans to avoid this by negotiating flexible price deals. The company also intends to take up a larger share in the gas market by building it Ennore LNG terminal. Mitsubishi Heavy Industries has been contracted by the IOC to build two liquefied natural gas storage tanks with the capacity of 180,000 cbm each.
Indian Oil also signed a contract with Black & Veatch for the regasification facilities. Black & Veatch will lead the engineering, procurement, construction and commissioning work on a turnkey basis, and the plant is scheduled to be completed by 2018.
LNG World News Staff; Image: K Line