Shell aims to secure long-term supplies for its $600mn terminal in western India in the next 12 months, said Peter de Wit, executive vice president for global businesses at Shell Gas & Power International.

The terminal would switch partially from spot cargoes that kept the plant operating at no more than one-third of capacity in two years since starting.

Indian consumers are turning to imported gas, paying as much as five times more than subsidised domestic supply, because declining output from aging fields failed to keep pace with demand.

The turnaround at the terminal operated by Shell, the world’s biggest non-state LNG producer, reflects soaring demand from power plants and factories.

“Customers in India are willing to pay for gas,” de Wit said on April 27 in an interview at LNG 15, an industry event in Barcelona. “We are now in talks with suppliers and users for term contracts.”

Shell started the Hazira terminal to meet a government ruling that requires foreign companies to invest about $450mn in the nation’s oil industry before gaining access to the country’s retail fuel market.

Shell failed to find enough customers to commit to gas purchases on a term basis and in March 2004 sold Total a 26% stake to recoup part of its investment.

The Hague-based Shell started operating its 2.5mn metric tonne-a-year port and terminal project in Hazira in April 2005.

The terminal, Shell’s first-ever LNG import facility, imported three cargoes, or about 175,000 tonne, in the first year of operations ending March 2006.

Shell is boosting LNG imports because fertiliser, power and petrochemical plants in India are switching from more expensive naphtha, an alternative to gas.

Shell has imported two cargoes every month this calendar year from countries including Malaysia, Oman, Algeria and Trinidad, said a Shell official, who declined to be identified.

Each cargo of LNG is typically about 50,000-60,000 tonnes. The company typically imports two-thirds of its spot supplies from LNG projects in which it holds equity, de Wit said.

The company may give preference to term supplies from such projects, he said.

Shell has stakes in LNG ventures in Nigeria, Oman, Qatar, Malaysia, Brunei, Australia and Russia.

Asian LNG prices have doubled to about $10 a million British thermal units in the past three years after power demand from steelmakers and chemical plants climbed faster than capacity expansions.

One British thermal unit is the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit. That is about the same amount of heat from burning one match stick.

Plans by Shell to boost shipments through its facility may discourage rival Petronet LNG from leasing capacity at Hazira for additional imports of the clean fuel.

Petronet LNG, India’s biggest liquefied natural gas importer, said it may buy as many as 54 cargoes of LNG in the spot market in the next two years from suppliers in Middle East and Africa, among others, the company’s managing director Prosad Dasgupta said last week in an interview at LNG15.

PIN/BLOOMBERG