Indian Oil Corporation (IOC), plans to set up another liquefied natural gas (LNG) terminal on the country’s eastern coast. IOC said in its annual report 2014-15 that “to meet the gas requirement of upcoming Paradeep refinery and other potential customers, setting up LNG terminal is under consideration at eastern coast in near future”.
In eastern coast, Petronet LNG has also announced that Petronet LNG Ltd. and Gangavaram port signed a firm and binding agreement for developing a land based LNG terminal at Gangavaram Port, Andhra Pradesh with capacity of 5 million metric tonne per annum.
IOC is also currently setting up its 5 million metric tonne per annum LNG terminal at Ennore near Chennai for import, storage and regasification of LNG. The terminal, which is being developed at cost of around Rs 4,500 crore, is targeted to be completed by 2015-16. However, the project is likely to be delayed further, considering the present pace of progress.
Proposed LNG terminal at Mangalore
Oil & Natural Gas Corporation (ONGC) and its partners Mitsui of Japan and Bharat Petroleum Corporation Ltd ( BPCL )have signed an agreement to conduct feasibility study for setting up 500-750 million US$ LNG import terminal at Mangalore. Of initial capacity of 2-3 million metric tone per annum, which can be expanded to 5 million metric tonne per annum later.
The following is the LNG terminal capacity for the projects that are operating or firmly under implementation. The above new proposed projects at Gangavaram, Mangalore and the proposed project of IOC in east coast are in the preliminary stage.
LNG terminal capacity (In MMSCMD)
|Total capacity (MMTPA)||19.80||27.50||27.50||37.5||50|
Kochi LNG terminal
LNG terminal built at Kochi in Kerala, which was commissioned after several years of delay, is now facing distress scenario.
Around Rs.4000 crores was spent on building this LNG terminal. Due to lack of pipeline connectivity, the terminal’s capacity utilisation is merely 1.4 percent. Only 0.66 trillion British thermal units of natural gas is regasified and was sold from the terminal during the first quarter of fiscal 2014-15. The gas was sold to the Kochi refinery.
The terminal is now operating at very low capacity utilization level, due to delay in implementation of pipeline project that would take the gas to Kerala ,Tamil Nadu and Karnataka. The Tamil Nadu government appears to be remaining unconcerned about the delay in the pipeline project in the state due to agitation by farmers which would result in the loss of investment opportunities for setting up several gas based projects, that may involve in investment of more than Rs.15000 crores and providing significant economic benefits for the region. No worthwhile efforts have been made to find amicable solution to the project for laying pipeline in Tamil Nadu.
Now, the helpless management of the Kochi LNG terminal is planning to rent out the terminal as a storage facility for international LNG players!
How many more LNG terminals?
India is becoming increasingly dependent on import of natural gas for its requirement and LNG terminals are being planned or built with the objective of facilitating the import of natural gas to meet India’s future needs.
However, the fact is that no clear cut plans have been evolved as to what extent the import of natural gas should increase in India in future and whether so many LNG terminals would be necessary .
Extensive and increasing dependence on natural gas import may expose Indian consuming sector to uncertain situations in future, from the point of view of availability, cost and delivered price. Such huge import of natural gas may also disturb the current account financial scenario in the country.
New LNG terminal projects are being announced by the companies , without their decisions being coordinated and guided by Government of India.
Since LNG terminals are highly capital intensive projects and take long years for implementation, investment in LNG terminals should be planned with clarity and based on India’s long term natural gas import strategies. It appears that no such strategies exist at present.