Oman LNG has 'invoiced' Dabhol Power Co (DPC) in the Indian state of Maharashtra to pay for the gas it failed to take, according to company chairman Salim bin Mohammed Shaban, who is also undersecretary at the Ministry of Oil and Gas in Oman.
"We cannot say how much loss we incurred," Shaban said at the presentation of the company's annual report. "We mitigated the problem by selling it in the spot market."
Oman LNG had entered into a FoB sales and purchase agreement in 1998 to supply DPC. However, the construction of the LNG terminal was halted in Maharashtra as DPC ran into trouble and decided not to lift any LNG. The Omani company, claims that they were successful in selling most of the volume to European market.
Oman LNG sold six spot cargoes to Enron, but it was diverted to Puerto Rico to capture higher price with the prior consent of the American company. Enron's declaration of bankruptcy resulted in the cancellation of the cargo before the last loading date. However, Oman LNG managed to sell 34 spot cargoes until the first week of April this year.
Company chief executive Agnus Cassens, underlined the refinancing of the project in January this year. "The loan facility was replaced with one single commercial facility of $1.3 billion," he said.
The company has earned a net profit of $691.75 million last year against the deficit of $3.19 million in the first nine months of 2000. Cassens added that dividend of $674 million was paid in April this year.
He revealed that Oman LNG's profile was raised with the unprecedented credit ratings of A3/A- obtained from Moody's Investors Services and Standard and Poor's. He claimed that these were the highest ever project finance ratings received by any company outside U.S., Canada UK and Australia.
Oman LNG runs two trains and the company chairman revealed "a third train has been given go ahead."
"We have customers for the 50 per cent of the third train," he confirmed and added that they were negotiating with the other 50 per cent of potential customers.
Shaban predicted a profit of $500 million for Oman LNG for 2002 and a similar profit next year. "This profit we anticipate but a lot depends on the behaviour of oil prices too," he remarked.
Oman LNG aim to increase Omani staff by 4 per cent every year until they reach 90 per cent Omani staff strength.
Cassens announced that Oman LNG had successfully completed eight million hours without any accident.