Petronet LNG, a joint venture of the government of India in the energy sector, which is setting up the second LNG receiving and re-gasification terminal at Puthuvype in Kochi, has signed a memorandum of understanding with Gazprom, a natural gas supplying company based in Russia. Petronet was in advanced discussion with Qatar, said A.K. Balyan, Managing Director and CEO. He was talking to mediapersons here on Tuesday night.

The company is looking at the US markets as well, Mr. Balyan said. Two (natural gas) projects were coming up in Africa – at Mozambique and Angola. There are several other new projects. Sourcing of natural gas won’t be a problem. “What is important is that we should be able to get gas at competitive prices,” he said.

The Kochi terminal will have a capacity of 5 MMTPA. According to an agreement signed with Australia, 1.5 million tones of gas will be received for the Kochi project. Arrangements have already been made to distribute the same. New sources are being looked at. Fresh contracts will be entered into only according to the demand.

“When India buys gas, it is as per international price. Unlike crude oil, there are certain gas markets in the world which are different. US market is different; European market is different; South Asian market is different. We have to integrate with international markets, there is no alternative,” he said.

Prices to the domestic market are determined on the basis of the contract for which the incoming supply has been arranged. “During every timeline, there is a prevailing price. The present price is different from the price which was agreed upon for the Dahej plant in Gujarat”, he said responding to a question on the price differential in Kerala and Gujarat.

The LNG project in Kochi is expected to be commissioned by December this year. Earlier, the company had planned to commission the project by the middle of 2012. But the capacity doubling from 2.5MMTPA to 5MMTPA required additional infrastructure to be integrated, he said.

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