Petronet to Resume Spot LNG Imports Next Month For First Time This Year.

Petronet LNG Ltd., India’s biggest importer of the fuel, plans to buy spot cargoes of liquefied natural gas next month for the first time this year to take advantage of a shortfall caused by a BG Group Plc field closure.

“The shutdown has released some pipeline capacity and there is always an appetite for gas,” Amitava Sengupta, director of finance and commercial, said by telephone today. Petronet will import three cargoes in September and may buy one cargo a month starting in October, depending on when production resumes at BG’s Panna-Mukta fields off India’s west coast.

India’s pipeline capacity expansion has fallen behind as Reliance Industries Ltd. boosted output at the country’s biggest gas field last year. The pipeline shortage may curb the ability of India’s power and fertilizer producers to benefit from increased LNG availability as the U.S. raises domestic output of shale gas.

Petronet shares declined 2.1 percent to 112.30 rupees in Mumbai trading today. The stock has gained 58 percent this year compared with a 4 percent increase in the benchmark Sensitive Index.

Petronet’s imports starting in October will depend on the availability of capacity to carry the fuel to consumers.

“Once more pipelines start coming up, imports will rise,” Sengupta said.

Petronet, based in New Delhi, hasn’t purchased spot LNG since December, when Reliance increased supplies from KG-D6. India’s LNG imports may rise as Reliance delays increasing production from the field, Sengupta said.

Reliance Production

Reliance produces about 60 million cubic meters of gas a day from KG-D6, the explorer said in a statement July 27. Production will remain at the current level until Reliance completes a review of the reservoir and safety procedures, Chief Financial Officer Alok Agarwal said that day.

Reliance, India’s biggest company by market value, will increase gas output from KG-D6 to a peak rate of 80 million cubic meters a day in the year starting April 2012, Oil Secretary S. Sundareshan said July 28. India produced 130 million cubic meters of gas a day in the year ended March, according to the oil ministry.

“We are looking for longer-term contracts too to help meet the deficit,” Sengupta said. “We are talking to companies in Qatar, Australia and one or two more countries.”

BG, the U.K.’s third-largest gas producer, halted about 35,000 barrels a day of oil and 205 million cubic feet a day of gas production on July 20 after a leak in a sub-sea pipeline, the company said in an e-mail Aug. 2.

LNG is created by cooling gas to about minus 260 degrees Fahrenheit (minus 162 degrees Celsius), shrinking it to about a 600th of the original volume, according to the U.S. Department of Energy.

Source : bloomberg.com