NTPC agrees to buy LNG from GAIL at $8 per mmBtu

The National Thermal Power Corporation of India (NTPC) has signed an agreement to buy liquefied natural gas (LNG) from GAIL India for 10 years at a delivered price of close to $8 per million British thermal unit as against a $6.7 per mmBtu asked by Reliance Industries for gas delivered to the state-run power utility.

NTPC will buy 2 million standard cubic meters per day of gas for 10 years beginning fourth quarter of 2009, reports quoting a company official said.

NTPC stands to lose around Rs1,000 crore on the use of imported fuel instead of buying natural gas from Reliance Industries' KG-D6 fields to fire its power plants.

GAIL has committed to sell liquefied natural gas (LNG) to be imported from Qatar at Petronet LNG's Dahej terminal in Gujarat at the pooled price ex-terminal or at the average of long-term and short term LNG being imported by PLL.

With the pool price currently standing at $6.29 per mmBtu, the delivered price of gas at NTPC plants, including the cost of transportation, taxes and marketing margins, would work out to around $8 per mmBtu.

Against this, the delivered price of gas from Reliance Industries' KG-D6 fields priced at $4.2 per mmBtu and a delivered price of $6.7 per mmBtu at NTPC's plants in Delhi.

NTPC has signed an agreement with GAIL India to buy 2 million standard cubic meters per day of gas for 10 years at a delivered price of close to USD 8 per million British thermal unit.

NTPC has also offered to buy 1.9 mmsmcd of imported gas for six months beginning September. Besides GAIL, Indian Oil and Bharat Petroleum are likely to bid for the tender.