Deepak Fertilisers enters into a 15-year LNG contract with Norwegian Giant - Equinor

Deepak Fertilisers enters into a 15-year LNG contract with Norwegian Giant - Equinor

The agreement covers an annual supply of around 0.65 million tons (ca 9 TWh) of LNG for 15 years starting from 2026

  • By ICN Bureau | February 19, 2024

Deepak Fertilisers and Petrochemicals Corporation Limited (DFPCL), one of India's leading producers of industrial chemicals and fertilisers, and Equinor, an international energy company headquartered in Norway, have entered into a long-term supply agreement for Liquefied Natural Gas (LNG).

With this tie-up, DFPCL strengthens its value chain with an attractive long-term LNG contract to solidify its value chain from Gas to Ammonia to various downstream Fertilisers, Industrial Chemicals and Mining Chemicals. This end-to-end tie-up shall establish a strong long-term foundation for all of DFPCL's product segments.

Equinor, erstwhile Statoil, is amongst the established leaders in the oil & gas sector over the last 50 years, with a market cap of USD 75 Billion wherein majority shares are owned by the Norwegian Government.

The agreement signed by Irene Rummelhoff, Executive Vice President, Equinor and Sailesh C. Mehta, Chairman & Managing Director, DFPCL, is one of the largest contracts signed by Equinor with a private sector company in India.

This agreement is for annual supplies of up to 0.65 million tonnes over a period of 15 years, beginning 2026. The tie-up provides room for trading some LNG parcels in the growing LNG demands in India as well as accommodating DFPCL's growing captive needs. The LNG will be delivered to the west coast of India. DFPCL is at an advanced stage of tying up the Regasification Terminal with the Gas pipeline grid connectivity to its plant's doorstep already in place.

The LNG agreement also encourages the companies to further collaborate on petrochemicals feedstocks and strategic decarbonization pathways in the future.

"We are very happy to enter into this long-term agreement with Equinor for supply of LNG. This will put on a solid footing Deepak Fertilisers value-chain right from Gas to Ammonia to building block Nitric Acids to downstream Fertilisers, Mining Chemicals and Industrial Chemicals, helping it to absorb Global volatility as well as enhance overall margins. We also look forward to exploring with Equinor, strategic tie-ups in our Chemical Business, as well as carbon footprint reduction initiatives." said Sailesh C. Mehta, Chairman & Managing Director, DFPCL.

"I am happy that we have entered into this agreement with Deepak and it is an example of how we use our position in the Atlantic basin to strengthen our relationship with key players in the growing Indian market. Ammonia is a key building block for the society, being crucial for agriculture and food security. Deepak's new ammonia plant will provide new, domestic fertiliser supply to India and we are proud to provide its feedstock in the form of natural gas. We look forward to further developing our relationship with Deepak on feedstocks and low carbon initiatives in the future", says Equinor's Senior vice president for Gas & Power Helge Haugane.

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