Former secy demands probe into LNG deal

A Rs 27,000 crore loss caused by an alleged change of contract by a Qatari company supplying liquid natural gas (LNG) to Petronet LNG needs to be probed, former Secretary to Government of India E A S Sarma has said.

In a letter to the PMO, he sought a CBI probe into the role of Oil Ministry officials and Petronet LNG in allowing RasGas of Qatar to allegedly violate the contract for the supply of 7.5 million tonnes per annum of LNG. He asked how Petronet, whose Chairman is Oil Secretary, 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).

As per the contract signed in 1999, Qatar was to supply 7.5 million tonnes of rich gas containing compounds like propane and butane from which LPG and other petrochemicals can be produced.

While RasGas gave rich gas in the first tranche of 5 million tonnes beginning 2004, it “violated the contract and started supplying (the remaining) 2.5 million tons of ‘lean’ gas without any corresponding change in price of LNG, causing a loss assessed at Rs 27,000 crore over the life of the contract,” he wrote.  He added that “perhaps, Qatar had offered to compensate Petronet for the loss but some intermediary deprived the public exchequer.” The four oil and gas PSUs have a combined stake of 50 per cent in Petronet LNG.

The company revised the deal in 2006, whereby it agreed to take 5 million tonnes of rich gas and for the rest agreed to RasGas’s condition that the rich gas will be supplied on “best endeavour basis” instead of contractual commitment.