GAIL in talks to buy LNG stake in Papua project
State-run gas utility GAIL is in talks with Canada's Interoil Corporation for buying into a project proposed in Papua New Guinea for exporting natural gas in ships as LNG or liquefied natural gas, chairman B C Tripathi said on Monday on the sidelines of the 6th Asia Gas Partnership Summit here.
Papua New Guinea last year granted initial approvals for the Pacific nation's second LNG project, which would follow a plant proposed by a venture led by ExxonMobil of the US. The venture would cost about $5 billion for a plant producing 3.5 million tonnes a year of LNG, with shipments due to start in 2014.
""We are in discussions with Interoil... it is at a preliminary stage and I cannot say what stake GAIL can get,'' Tripathi said. ""A lot will depend on due diligence.'' Equity in an LNG project will ensure steady supplies in future for GAIL to meet its expanded pipeline and petrochem capacity.
The utility will complete the first phase of expansion of its pipeline network by next month. By December, it would have added some 5,000 km of pipelines creating adequate capacity to wheel gas to doorsteps of industrial customers and connect new consumption centres in the north.
GAIL expects demand for spot LNG would open up once the company completes the expansion of a pipeline that connects the west coast to markets in the north. That's why GAIL has plans to import one LNG cargo a month from the spot market to meet rising demand after the expansion. It is expected the company will buy one cargo in June or July.