Mumbai, Nov 16: US energy major Enron Corporation has initiated negotiations with potential buyers to market liquefied natural gas from its proposed 5mtpa (million tonnes per year) terminal in the West Coast of Maharashtra. Most of the companies that have outlined their expansion plans are from the fertiliser and power sectors.

The US multinational has signed a broad memorandum of agreements with some of these companies for supply of gas. Among the fertiliser companies, it has approached Rashtriya Chemicals & Fertilizers (RCF), Iffco, Gujarat Narmada Valley Fertilizers Company (GNFC) and Khribhco. Among power companies, it is in talks with BSES and Ispat Industries, sources said.

While with Rashtriya Chemicals and Fertilisers and Iffco, it has already entered into a broad agreement, with other companies, it is still in talks. The volume requirement for RCF is 0.45 mmscmd of LNG at Trombay and 2.3 mmscmd at Thal. RCF is investing Rs 250 crore in the de-bottlenecking process at Thal and Trombay. In the third-stream expansion plan, it is investing Rs 1,100 crore.

Iffco is said to have entered into an agreement with Enron for a volume of 0.7 mmscmd of liquefied natural gas for its Kalol expansion and 1.7 mmscmd for its other expansion plans. For BSES, the requisite volume is 0.5 mmscmd.Enron has offered 3 million tonnes per annum or 12 mmscmd of gas on a long-term committed basis to potential customers in Maharashtra, Gujarat, Goa, Karnataka, Rajasthan, Uttar Pradesh, Madhya Pradesh, Haryana and Punjab. It is learnt that Enron has indicated that the price of gas is expected to be lower than the price of imported naphtha.

The supply of gas is expected to begin on December 31, 2001, when Enron's $400-million, 36-inch pipeline which extends up to Hazira commences operations.

The fertiliser industry now faces a gas crunch with expansion plans in a limbo. In addition to the Enron LNG project, there are other projects expected to come up at Mangalore on the West Coast and Ennore on the East Coast. This will provide some relief to the industry.

According to sources in the fertiliser industry, considering that a standard gas-based fertiliser plant which produces 7.4 lakh tonnes per annum of urea requires 1.5 mmscmd of gas (including gas required for captive-power consumption), Enron's surplus gas made available will be sufficient to set up at least six urea plants in the country. Given the backdrop of urea deficit and with imports close to 3 million tonnes a year, putting up additional urea projects in the country will serve to block this deficit, sources said.

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