BPCL-ONGC's Rs 5k-cr Mangalore LNG terminal on ice over 'viability'

The wait for the east coast to have a liquefied natural gas (LNG) terminal might get longer, with Bharat Petroleum Corp Ltd (BPCL) and Oil and Natural Gas Corp Ltd (ONGC), the two state-run companies that had proposed to jointly develop a terminal in Mangalore, putting the plan on hold.

Senior executives in both companies say how far the two partners could sell the fuel in the domestic market is under doubt. Given that the Dabhol and Kochi terminals will be commissioned next year, Mangalore will be well-connected by pipelines, said a senior BPCL executive, who requested anonymity.

“We are thinking whether the Rs 5,000-crore regasification plant is viable,” he said.

However, R K Singh, chairman and managing director of BPCL, said: “The LNG terminal project is very much on the table and we have not scrapped it.”

Oil marketing and refining major BPCL had originally planned to bring in natural gas from its Mozambique block to Mangalore.

Singh recently told reporters the company could also use Petronet LNG Ltd’s (PLL’s) regassification terminal at Kochi for importing gas, as BPCL is an equity holder in PLL.

PLL, mainly involved in importing LNG and setting up and running terminals, is a venture jointly promoted by GAIL India Ltd, ONGC, IndianOil Corp Ltd and BPCL.

A senior ONGC executive, too, said that though the terminal had been under planning stage for almost a decade, companies were still mulling over the viability plan. “Right now, the only LNG consumers in the said region are MRPL (Mangalore Refinery and Petrochemicals Ltd) and a few small industrial users nearby. This makes not only consumption but viability (of the terminal) also an issue,” he said, also on condition of anonymity.

The Dabhol LNG terminal, which has government-owned NTPC Ltd and GAIL as partners, is expected to be commissioned in January, after being delayed by a good 15 years. “Construction (of Dabhol LNG terminal) is expected to be completed by November-end. We are expecting the first cargo by December and commissioning should happen by January 2013,” B C Tripathi, chairman and managing director of GAIL, said last month.
 

PROJECTED LNG CAPACITY*
Terminals (Mtpa)	2011-12	2016-17
PLL (Dahej)	10.0	10.0
PLL (Kochi)	0.0	5.0
Shell, Hazira	3.7	3.7
Dabhol	0.0	5.0
Mundra	0.0	5.0
Ennore	0.0	5.0
Total	13.7	33.7
Source: ICRA Rating Service *In india

PLL’s Kochi terminal will be commissioned by the fourth quarter of this financial year. According to a report by energy information provider Platts, a connecting pipeline network is behind schedule, holding up PLL’s commissioning of the 5-million-tonne Kochi terminal.

Currently, both PLL's terminal at Dahej, and Shell and Total's terminal at Hazira in Gujarat are under expansion. These are the only two LNG terminals in the country and, even though both are on the west coast, they are connected to pipeline networks.

Holland-based Shell has begun expansion of its 3.6-mt terminal to an annual capacity of 10 mt. The expansion may cost the company Rs 4,000 crore, a senior Shell executive had earlier told Business Standard. The terminal began with a capacity of 2.5 mt and was expanded to 3.6 mt after Shell completed ‘de-bottlenecking’ in December 2008.

PLL, too, expanded infrastructure to handle 10 mt at Dahej in 2009, though its nameplate capacity is 5 mt.

In the next five years, India is expected to have a total of five LNG terminals with a total capacity of over 118 million standard cubic meters of gas per day (mscmd) against the present two operational LNG terminals at Gujarat.

IndianOil is building an LNG terminal in Ennore, near Chennai, with a capacity of 5 mt at an estimated cost of Rs 4,320 crore. It is to be commissioned in 2016. Gujarat State Petroleum Corp is also planning to commission an LNG terminal with a capacity of 5 mt at Mundra by 2015-16.