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Doha / New Delhi, Nov 26:
Qatar has agreed to supply 1.2 million tonnes per annum of liquefied natural gas (LNG) to fire the Dabhol power plant in Maharashtra, but differences persist over the price.

“Rasgas has agreed, in principle, to supply 1.2 mmtpa of LNG from March ’07 to early ’09,” a top official said after Qatar’s second deputy prime minister and ministry of energy and industry Abdullah Bin Hamad Al Attiyah called on prime minister Manmohan Singh here. Petroleum minister Murli Deora accompanied Mr Attiyah.

Petronet LNG, which has been contracted by Ratnagiri Gas and Power - the new owner of Dabhol plant, would import 1.25 mmtpa of LNG at its Dahej terminal in Gujarat and supply it to the power plant through the Dahej-Uran pipeline.

However, the two sides have not been able to agree on the price of gas. While Rasgas marginally lowered its earlier offer price of about $10 per million british thermal unit (mbtu), the Indian firm was willing to pay no more than $5.5 per mbtu, the official said. “They are still insisting on a price of $7-8 per mbtu,” he said.

The official said further discussions on price would be held on Friday and Saturday and expressed hope to persuade Rasgas to agree at a price of $5.5 per mbtu. This would translate into a delivered cost of $7.3 per mbtu. At $8 per mbtu burner tip price, the variable fuel cost comes to Rs 2.68 per unit. Together with the fixed cost of Re 1 per unit, the generation cost would be Rs 3.68 per unit.

The Dahej terminal already receives 5 million tonnes per annum of LNG from Rasgas under a separate long-term contract. The terminal has 1.25 million tonnes of spare capacity that would be utilised for imports for Dabhol.

LNG will be imported at Dahej as the 5 million tonnes per annum LNG import facility adjacent to the Dabhol power plant, though to be fully completed by March ’07, cannot be operationalized without a breakwater. 


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