A Rs. 27,000 crore loss caused by an alleged change of contract by a Qatari company supplying liquid gas (LNG) to Petronet LNG needs to be probed, former secretary to government of India, EAS Sarma, has demanded.
Sarma in a letter to the Prime Minister's Office sought a CBI probe in the role of officials of Oil Ministry and Petronet LNG Ltd in allowing RasGas of Qatar to allegedly violate the contract for supply of 7.5 million tonnes per annum of liquefied natural gas (LNG).
He wanted a 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 of rich gas that can also produce petrochemicals and cooking gas (LPG).
As per the contract, Qatar was to supply 7.5 million tonnes of rich gas containing compounds like propane and butane from which LPG and other petrochemicals can be produced.
While RasGas gave rich gas in the first tranche of 5 million tonnes beginning 2004, it "violated the contract and started supply (the remaining) 2.5 million tons of 'lean' gas without any corresponding change in price of LNG, causing a loss assessed at Rs. 27,000 crore over the life of the contract," he wrote.
Lean gas is the stripped of propane and butane.
"Perhaps, Qatar had offered to compensate Petronet for the loss but some intermediary had deprived the public exchequer of the corresponding benefit," he wrote.
Petronet LNG, which is majority owned by state-owned oil companies, had in 1999 signed a contract with Qatar's RasGas to buy 7.5 million tonnes a year of natural gas that has been cooled to liquid form (LNG) so that it can be shipped.
The contract was for import of 5 million tonnes of LNG at Petronet's Dahej terminal in Gujarat and 2.5 million tonnes at its Kochi facility in Kerala. All of the 7.5 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 building blocks for petrochemicals and LPG.
RasGas began supplies of 5 million tonnes a year of rich-LNG at Dahej in 2004. But supply of the remaining 2.5 million tonnes could not start as construction on Kochi terminal was delayed.
In 2005, Petronet entered into negotiations with RasGas to advance the tranche-2 volumes of 2.5 million tonnes. They proposed to buy the entire 7.5 million tonnes a year of contract supplies at Dahej.
Petronet signed a revised deal in 2006 wherein it agreed to take 5 million tonnes of rich gas and for the rest agreed to RasGas condition that the rich gas will be supplied only on best endeavour basis rather than as contractual commitment.