India's Petronet eyes LNG from Papua New Guinea

NEW DELHI, Feb 19 (Reuters) - India's Petronet LNG (PLNG.BO: Quote, Profile, Research) is looking at buying liquefied natural gas (LNG) from a proposed 6.3 million tonnes a year project in Papua New Guinea, its Director of Finance, Amitava Sengupta said on Tuesday.

India, Asia's third-largest energy consumer, faces a natural gas supply crunch with booming demand for the clean fuel far outstripping domestic supplies.

"We have expressed interest for sourcing LNG from the project. Formal negotiations will soon start," Sengupta told Reuters.

The project is 34 percent owned by Exxon Mobil (XOM.N: Quote, Profile, Research) and 30 percent owned by Australia-listed Oil Search Ltd (OSH.AX: Quote, Profile, Research).

Papua New Guinea aims to become an important liquefied natural gas exporter and to bring the proposed $10-billion liquefaction plant run by Exxon onstream by late 2013, its Planning Minister Paul Tiensten said on Dec 6.

Petronet is also in talks to buy Exxon's share of 3.75 million tonnes a year LNG from Australia's Gorgon project. It plans to bring Gorgon LNG through a new terminal at Kochi in the southern state of Kerala, which is expected to be commissioned in 2011.

Petronet is in talks with Algeria, Oman, Egypt, Qatar and Trinidad & Tobago to agree long-term contracts as it plans to ramp up capacity at its Dahej terminal to 10 million tonnes by December 2008 from the existing 6.5 million tonnes.

The firm gets 5 million tonnes a year from RasGas under a long-term LNG deal with Qatar, and that will be raised to 7.5 million tonnes from 2009.

Gas demand in India runs at around 179 million standard cubic metres a day, but domestic gas availability is only around 95 mmscmd. Production is expected to rise to more than 190 mmscmd by 2009 after new gas fields come on stream.

Goldman Sachs estimates the share of natural gas in India's coal-dominated energy basket will double to 18 percent by 2015 and stabilise at 20 percent by 2025. (Reporting by Nidhi Verma, Editing by Mark Williams)