The Wall Street Journal: GSPC May Buy LNG From Shell 's Project In W India-Official

DOW JONES NEWSWIRES

June 25, 2004 11:08 a.m.

NEW DELHI -- India's Gujarat State Petroleum Corp., or GSPC, is in talks with Shell India Ltd. to buy liquefied natural gas from Shell 's 5 million metric ton a year new LNG import terminal at Hazira in the western state of Gujarat.

A senior official with the oil and natural gas exploration and production company said late Friday that price talks were underway. "Hopefully, we will be able to finalize a deal soon," he said.

The official declined to say how much LNG GSPC wants from Shell India and at what price.

Global energy firm Royal Dutch/Shell Group (RD) plans to sell liquefied natural gas in India from late 2004.

Shell’s LNG import terminal at Hazira will be ready to take LNG deliveries during the second half of 2004. The project, which will have a regassification facility and an all-weather, multi-cargo handling port is being built at a cost of around $600 million.

Gas accounts for about 9% if India's primary energy consumption and overall domestic natural gas output is currently about 67 million cubic meters a day.

While India doesn't produce any LNG, it's considered to be a potentially major market, as known domestic natural gas supplies are unlikely to keep pace with demand.

Recent industry estimates show there's currently a gas supply shortfall in India of at least 35 million cubic meters a day.

-By Himendra Kumar, Dow Jones Newswires; 91-11-2307-4020; himendra.kumar@dowjones.com