At a time when a debate is on over market prices of natural gas, power major NTPC is on the negotiating table in Nigeria to strike an LNG deal that could bring in gas at a low price of $3-4 per mmBtu. Once finalised, the deal could trigger off a new twist in the gas debate where domestic producers have come up with their own formula that put gas prices at a much higher level.
“We have signed an MoU with the Federal Government of Nigeria (FGN) under which the latter has agreed to provide at least 3 million tonnes per annum (MPTA) of LNG to NTPC on a long-term basis at a reasonable price and encourage the company to participate in bidding for gas blocks. The indicative price of gas from Nigeria looks attractive that would help make our gas-based power projects offer competitive pricing,” NTPC chairman and managing director T Sankaralingam told ET.
Under the deal, NTPC has agreed to set up and operate a 500 mw coal-based power plant and a 700 mw gas-based power plant in Nigeria on its own or through a joint venture after LNG supplies begin.
The deal with Nigeria is a part of business strategy finalised by the PSU under which the company would look for opportunities for sourcing gas from across the globe while expanding its generation business. NTPC has entered into a similar understanding with Iran for supply of LNG for its gas-based projects.
The $3-4 per mmBtu price expected for Nigerian gas would be competitive compared to a price of $4.33 per mmBtu arrived at by Reliance Industries for its discovery in the K-G Basin. The company had earlier offered a price of $2.97 per mmBtu to NTPC for its 1,300 mw gas-based projects in Kawas and Gandhar which it revised later, resulting in a legal battle between the two companies.
It is understood LNG from Nigeria may also be used by NTPC to feed the Dabhol power plant managed by Ratnagiri Gas & Power (RGPPL), a joint venture promoted by Gail and NTPC.
While Gail has been mandated to manage the 5-million-tonne LNG terminal attached to the plant and the government is considering hiving it off from RGPPL, NTPC is likely to use its right of first refusal so that it could be used for meeting the requirements of the PSU’s gas-based projects.
“We have signed an MoU with the Federal Government of Nigeria (FGN) under which the latter has agreed to provide at least 3 million tonnes per annum (MPTA) of LNG to NTPC on a long-term basis at a reasonable price and encourage the company to participate in bidding for gas blocks. The indicative price of gas from Nigeria looks attractive that would help make our gas-based power projects offer competitive pricing,” NTPC chairman and managing director T Sankaralingam told ET.
Under the deal, NTPC has agreed to set up and operate a 500 mw coal-based power plant and a 700 mw gas-based power plant in Nigeria on its own or through a joint venture after LNG supplies begin.
The deal with Nigeria is a part of business strategy finalised by the PSU under which the company would look for opportunities for sourcing gas from across the globe while expanding its generation business. NTPC has entered into a similar understanding with Iran for supply of LNG for its gas-based projects.
The $3-4 per mmBtu price expected for Nigerian gas would be competitive compared to a price of $4.33 per mmBtu arrived at by Reliance Industries for its discovery in the K-G Basin. The company had earlier offered a price of $2.97 per mmBtu to NTPC for its 1,300 mw gas-based projects in Kawas and Gandhar which it revised later, resulting in a legal battle between the two companies.
It is understood LNG from Nigeria may also be used by NTPC to feed the Dabhol power plant managed by Ratnagiri Gas & Power (RGPPL), a joint venture promoted by Gail and NTPC.
While Gail has been mandated to manage the 5-million-tonne LNG terminal attached to the plant and the government is considering hiving it off from RGPPL, NTPC is likely to use its right of first refusal so that it could be used for meeting the requirements of the PSU’s gas-based projects.
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