WebSify
Follow us on
Mail
Print

Fresh probe ordered in Petronet-Ras Laffan deal

Source : BUSINESS_STANDARD
Last Updated: Fri, Feb 22, 2013 21:51 hrs

The Ministry of Petroleum and Natural Gas has ordered a fresh inquiry into the gas supply deal between Petronet LNG Ltd (PLL) and Qatar-based Ras Laffan, after allegations that “discrepancies” in the deal led to a loss of Rs 27,000 crore for the company.

“The petroleum minister (Veerappa Moily) was unsatisfied with the earlier inquiry ordered by former minister Jaipal Reddy. He appointed a two-member team in January. The team is supposed to come up with a report on this within two months,” a top ministry official said.

Petronet Chief Executive Officer and Managing Director Ashok Kumar Balyan was not reachable for a comment.

Ras Laffan is a unit of Ras Gas, jointly owned by Qatar and Mobil in a 70:30 ratio.

The deal in question provided Petronet to have the first right to pick up a five per cent stake in the LNG terminal in Qatar without any premium.

According to former power secretary E A S Sarma, who has written a letter to the Prime Minister seeking a Central Bureau of Investigation inquiry into the deal, Petronet, for some inexplicable reason, desisted from exercising its right to the detriment of public interest. A copy of Sarma’s letter is with Business Standard.

According to Sarma, the shortcomings in the contract forced Petronet to pay $12 per mmBtu for Qatar’s LNG. This is much higher than $2.34 per mmBtu offered by Reliance to NTPC from the KG Basin and $4.20 per mmBtu, the price fixed by the government for the same gas. “The loss on this account has been estimated at $56 billion over the life of the contract,” the letter said.

According to the contract, Ras Laffan was supposed to supply 7.5 million tonnes of rich liquefied natural gas, which contains higher hydrocarbons like propanes and butanes, in two tranches every year to enable India to utilise those higher hydrocarbons for producing petrochemicals. However, the global energy major has allegedly violated the contract and started supplying 2.5 mt of “lean” gas every year.

According to Sarma, when the Asian Development Bank tried to offload its 5.2 per cent stake in Petronet, the ministry offered it to the Qatar company. “The contract provides the first right to purchase the stake to the PSU equity partners in Petronet, like GAIL.” The other promoters of Petronet include Oil and Natural Gas Corporation, Indian Oil Corporation and Bharat Petroleum Corporation.




blog comments powered by Disqus
most popular on facebook
talking point on sify finance