State-owned Oil and Natural Gas Corporation (ONGC) has chalked out a multi-billion dollar plan to foray into the business of liquified natural gas (LNG).
The ONGC board has authorised the company to finalise arrangements with major suppliers for long-term sourcing of LNG at competitive prices and getting into downstream marketing of re-gasified LNG (R-LNG). ONGC already has an agreement with Ashok Leyland Project Services Ltd (ALPS) and Petronet LNG Ltd (PPL) for jointly pursuing LNG sourcing and investment in gas projects.
According to company officials, ONGC has identified two opportunities for the purchase of LNG on long-term basis. Without revealing details, they said the projects were code named Project 'Alpha' (Asia-Pacific) with PLL and Project 'Beta' with PLL-ALPS combine (The West Asia Project).
“The annual financial implication for 3 MMT of LNG would be $1 to 1.5 billion and the total implication for the 20-year term of SPA would be $20 to 30 billion,” said a senior petroleum ministry official.
From information that the Hindustan Times has gathered, the capacity of project Alpha appears to be 6.8 million metric tonnes per annum (MMTPA), and it is expected to begin operations by 2014.
Around 2.5 to 3 MMTPA of LNG is expected to be available out of this project. ONGC officials confirmed that a Sale and Purchase Agreement (SPA) is under discussion with the developers of the project. On project Beta, informed sources said the gas reserves are to the tune of 30 tcf and the developer is a national oil company. The due diligence of the project has been carried out by ONGC-PLL-ALPS team in March 2009.