Qatar and Australia are likely to supply fuel for restarting the $3 billion Dabhol Power Project in Maharasthra from the fourth quarter of 2006.

State-owned gas utility GAIL (India) Ltd is negotiating sourcing of at least one million tonnes per annum of liquefied natural gas from Qatar to begin operation of the 740 MW phase-1 of the project, a senior company official said.

Additionally, it is negotiating the supply of 2.3 million tonnes of LNG from Australia's North West Shelf LNG project.

The 2,184 MW Dabhol project has been shut since June 2001 over a billing dispute with its sole customer Maharasthra State Electricity Board and the government has now mandated GAIL and National Thermal Power [Get Quote] Corp for restarting the project. GAIL is charged with LNG sourcing and completion of the 5 million tonnes per annum LNG import and regassification terminal, adjacent to the power plant in Ratnagiri district, while NTPC would revive electricity generation.

The official said about 2 million tonnes per annum of LNG was needed to fire the 740 MW Phase-I and 1,444 MW phase-II and an additional 3 million tonnes for merchant sale.

"We have discussed with North West Shelf LNG consortium short-term supplies of 500,000 tonnes and long-term supplies of 2.3 million tonnes of LNG," he said.

Malaysia's Petronas has also agreed to supply 700,000 tonnes of LNG and Indonesia's BPMIGAS has also offered LNG.

UK-based Whessoe LGA Gas Technology has been appointed to complete the LNG terminal, the official said.

The official said LNG from Qatar may cost anywhere between $3.2-$3.5 per million British thermal unit while the same from Australia may be $3.6-$3.8 per mbtu.

Cost of transporting LNG from Qatar would be around $0.27 per mbtu while that from Australia would range between $0.90-$1.0 per mbtu.

"Since cost of transporting LNG from Australia would be more, we plan to swap the Australian LNG with Qatari LNG destined for Kochi LNG terminal in Kerala," the official said.

Qatar is to supply 2.5 million tonnes LNG at Kochi from 2008-09. Australian LNG would be used at Kochi while Qatari LNG would be diverted to Dabhol.

"We are targeting upto Rs 2.60 per unit generation cost from the revived power plant," he said.