Friday, Aug 20, 2010

(Adds comments of chief executive, details, background.)

By Rakesh Sharma

Of DOW JONES NEWSWIRES

NEW DELHI (Dow Jones)--Petronet LNG Ltd. (532522.BY) said Friday it is in talks with Qatar's Ras Laffan Liquefied Natural Gas Co. to buy a spot cargo of liquefied natural gas as a production suspension at India's Panna-Mukta fields has led to a local supply shortfall.

"We are working on with RasGas," Petronet LNG Chief Executive Ashok Balyan told reporters on the sidelines of an industry conference. "We will be able to finalize (the cargo deal) by the end of the month."

Balyan had Aug. 10 said Petronet LNG's first spot cargo in 2010 will likely reach its terminal in the western state of Gujarat by Aug. 20, but hadn't revealed the source of the cargo. On Friday, he didn't say why the cargo was delayed.

BG India, a unit of BG Group PLC (BRGYY), suspended production of oil and gas at the Panna-Mukta fields off the west coast July 20 due to a leak in an undersea pipeline. The fields produced about 35,000 barrels of oil and 205 million metric standard cubic feet of gas a day before the suspension.

"We have request from Bharat Petroleum, Indian Oil and GAIL for gas," Balyan said.

State-run Bharat Petroleum Corp. and Indian Oil Corp. refine crude and sell fuel products including gas to retail customers, while GAIL (India) Ltd. is India's main gas transporter.

A BG spokeswoman didn't immediately comment on the current status of production at Panna-Mukta.

Petronet LNG, India's largest LNG importer by volume, last bought a spot cargo in December. It stopped buying spot cargoes due to lack of spare pipeline capacity for gas transfer despite rising demand.

Balyan said also Petronet LNG is seeking more long-term LNG contracts with Australia and Qatar to hedge against price fluctuations and for full capacity utilization of its terminal.

Petronet LNG owns a 10-million-ton-per-year facility at Dahej in Gujarat and is building a 2.5-million-ton terminal at Kochi in the southern state of Kerala. It expects to commission the Kochi terminal by the middle of 2012.

It gets 7.5 million tons of LNG from RasGas under long-term contracts for the Dahej terminal. In August 2009 the company singed an agreement to buy another 1.5 million tons a year of LNG from Exxon Mobil Corp.'s (XOM) Gorgon project in Australia for 20 years.

It needs contracts for the remaining capacity at Dahej and for Kochi.

Qatar expects to increase its LNG supply to India to 11.5 million tons by 2014 from the current 7.5 million tons, its oil minister, Abdullah bin Hamad Al Attiyah, had said in March.

"Qatar has enhanced capacities. They are the biggest LNG suppliers," Balyan said without specifying how much more gas it plans to get from the Arab nation.

"Australia is also building some new projects," he said. "We want the best prices."

-By Rakesh Sharma, Dow Jones Newswires; +91-11-4356-3334; rakesh.sharma@dowjones.com

(END) Dow Jones Newswires

20-08-10 1046GMT