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Wednesday, 5 January 2011

India's NTPC in talks with Qatar on investment, LNG supplies

Mumbai (Platts)--22Dec2010/820 am EST/1320 GMT
Indian state-owned power utility NTPC Ltd is in talks with the Qatari government for LNG supplies and investment by Qatar in the company's gas-generated power projects, company sources said Wednesday.

Industry sources confirmed that the company has been in talks with Qatar about investment in NTPC's gas fired power generation project at Kayamkulam in Kerala, southern India. NTPC received intimations that Qatar would be interested in picking up a stake in the company's projects, so they could be speaking to them on gas supplies for them, sources said.

"We have initiated talks at the embassy level on getting around 1.3 million cubic meters a day of gas for our power plants," Arup Roy Choudhury, chairman and managing director of the company was quoted saying by Indian daily Daily News & Analysis.

NTPC Ltd signed agreements with public sector gas transporter GAIL and oil refining and marketing companies Indian Oil Corp Ltd and Bharat Petroleum Corp Ltd last year for supply of 1.2 million mt/year RLNG for 20 years.

RLNG supply for NTPC's 360 MW combined cycle power plant currently under operation at Kayamkulam would start from 2012, when Petronet LNG's Kochi terminal becomes operational, NTPC has said.

NTPC said the fuel agreement would be able to meet the requirement of the stage-I capacity of 360 MW currently being fired by naphtha and partly meet the requirement of stage-II expansion of 1.95 GW.

"The Qatari government is interested in investing in our power plants. So if, in return for gas, they take some equity, we are exploring that opportunity," Choudhury was quoted as saying by the newspaper.

"NTPC has gas availability issues and has been buying RLNG in the spot markets," equity analyst Rupesh Sankhe, who tracks the company for Angel Broking, said. "This is a good start. Maybe in the medium to long term they will end up with larger quantity/contract," he added.

NTPC has 3.955 GW of gas/liquid fuel based power generation capacity. In an investor presentation the company said it needs 17.35 million cu m/d of gas to run its plants at 90% plant load factor.

For the first quarter of the current financial year (April-March) the company said it received 15.12 million cu m/d of gas. In that quarter 3.92 million cu m/d of gas was from spot and fallback RLNG and it received additional natural gas of 1.77 million cu m/d from the eastern offshore KG D6 fields of Reliance Industries.

"After they started receiving gas from D6, PLF [plant load factor] has gone up to 80-85% from 60-65%, Sankhe said.

The Indian government had allocated 4.46 million cu m/d of gas from KG D6 and the company has signed gas supply and purchase agreement for 1.81 million cu m/d, the company said in an investor presentation in August.

NTPC and Reliance are involved in litigation over an earlier contract for 12 million cu m/d of gas from D6 at a price of $2.34/MMBTU.

NTPC has now made an additional request for allocation of 22.8 million cu m/d of gas which it is willing to buy at the government determined price for KG D6 gas, $4.2/MMBTU.

--Vaijayanthi Chakravarthy,

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