Oil ministry orders probe into Petronet LNG’s Qatar contract

Oil minister S Jaipal Reddy asked oil secretary GC Chaturvedi, who is also the chairman of Petronet LNG, to probe allegations that the company quietly switched to buying lean gas, which can only be used as fuel, instead of rich gas that can also produce petrochemicals and cooking gas (LPG)

New Delhi: Oil minister S Jaipal Reddy has ordered a probe into changes made in a multi-billion dollar contract for import of liquefied natural gas (LNG) from Qatar, following allegations of foul play, reports PTI.

Mr Reddy asked oil secretary GC Chaturvedi, who is also the chairman of Petronet LNG, to probe allegations that the company quietly switched to buying lean gas, which can only be used as fuel, instead of rich gas that can also produce petrochemicals and cooking gas (LPG), ministry sources said.

Petronet insiders, however, said the allegations were not true as the company was getting about 6.5 million tonnes out of the contracted volume of 7.5 million tonnes a year as rich gas from RasGas of Qatar.

While the entire 7.5 million tonnes was supposed to be rich gas as per the original contract signed in 1999, Petronet had altered the contract to advance supplies of second tranche of 2.5 million tonnes by a good five years, helping the nation save about a billion dollar every year.

Sources said after some MPs raised the issue, Mr Reddy asked the secretary in his ministry to look into the matter.

Petronet LNG, which is majority owned by state-owned oil companies, had in 1999 signed a contract with Qatar's RasGas to buy 7.5 million tonnes a year of natural gas that has been cooled to liquid form (LNG) so that it can be shipped.

The contract, sources said, was for import of 5 million tonnes of LNG at Petronet's Dahej terminal in Gujarat and 2.5 million tonnes at its Kochi facility in Kerala. All of the 7.5 million tonnes of LNG to be supplied by RasGas was supposed to be rich gas, which contains compounds like ethane, propane and butane that are building blocks for petrochemicals and LPG.

RasGas began supplies of 5 million tonnes a year of rich-LNG at Dahej in 2004. But supply of the remaining 2.5 million tonnes could not start as construction on Kochi terminal was delayed.

Sources said in 2005, Petronet management realised that India needed gas to meet its fast expanding economy and so entered into negotiations with RasGas to advance the tranche-2 volumes of 2.5 million tonnes.

They proposed to buy the entire 7.5 million tonnes a year of contract supplies at Dahej. But RasGas was not going to give into Petronet's demand so easily and stated that since all its production was committed, it can only supply lean gas or gas without ethane, propane, etc.

Petronet agreed and signed a revised deal in 2006. But it did not settle for this and entered into new negotiations asking RasGas to give all of 7.5 million tonnes of rich-gas.

RasGas relented and in 2008-09 agreed to supply rich gas for the second tranche quantity on best endeavour basis. It has been supplying about 1.5 million tonnes of tranche-2 quantity as rich gas since 2009.

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SC ruling on 2G will affect other sectors: Telecom minister

Telecom minister Kapil Sibal added that the government is studying the implications of the Supreme Court judgement and would take a view on the way how it should proceed. He added that judgement would have impact on the future of investments in the country

New Delhi: The Supreme Court judgement cancelling 122 telecom licences allocated on first-come-first serve basis has ramifications for other sectors like mining where the same principle is adopted, reports PTI quoting telecom minister Kapil Sibal.

"I have been saying this repeatedly that the impact of the judgement is far-reaching. It has implications not only on the (telecom) sector but on other sectors as well," Mr Sibal told PTI.

The apex court, cancelling licences allocated by the then telecom minister A Raja, had stated that auction was the best way for allocation of scarce natural resources. The court had also defined natural resources as both renewable and non-renewable.

Mr Sibal added that the government is studying the implications of the judgement and would take a view on the way how it should proceed.

"We will do that. As and when we do that, we take that decision, it will be placed in public domain," he said.

Mr Sibal cited example of the Mines and Minerals Regulation and Development Act that governs mineral resources in the country and auction of these resources can pose challenges.

"Suppose we want to mine a particular mineral and we find that for the prospecting of that mineral because you don't know what are the quantities of that mineral embedded in earth and you don't know where it is embedded so naturally you will request entrepreneurs to come and prospect," Mr Sibal said.

After entrepreneurs spend $600 million on prospecting, and find the mineral, should it be the policy to auction it. These are the questions which need to be looked into, he said.

The telecom minister said that the Supreme Court judgement would have impact on the future of investments in the country.

"We have to study all those things and then come to a considered view as to what extent it will impact and how we have to deal with it. So, we have not taken a position on it but these are all issues that need to be addressed," Mr Sibal said.

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COMMENTS

Shibaji Dash

5 years ago

Whom is Sibal warning?

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