GAIL mulls doubling capacity of Dabhol LNG terminal

State-owned GAIL India is mulling doubling capacity of Dabhol LNG terminal to 10 million tonne to meet growing energy needs of the country, company Chairman BC Tripathi said.

GAIL is looking to tie-up up to 2 million tonnes of LNG for import at the nation's third liquefied natural has terminal, which will tomorrow evening receive its first shipment from Norway, he told reporters here.

The so-called commissioning cargo, which will be offloaded on March 27, will be used to prepare the site for commercial operations.

Almost 60% of the cargo delivered by Excelerate Energy LLC will be used to test equipments and storages at the 5 million tons a year terminal which was built a decade ago and had been lying shut since then.

"We are in discussions with suppliers for buying 1-2 million tonne a year of LNG on a short-term contract of up to 3 years," Tripathi said. "It will all depends on how successful are we in commissioning the terminal."

Tripathi said doubling of the terminal capacity will depend on success of commission.

The terminal, which will take about 45-days to be fully commissioned, is expected to operate at less than 60% of capacity in the absence of a breakwater, which guard ships against high tides. In the absence of breakwater, the terminal may not be able to operate during four monsoon months beginning May-end.

The construction of a breakwater is likely to be completed in 2013-14 after which the LNG terminal will become fully operational.

Officials said Dabhol may see import of 8 shiploads of LNG this fiscal.

GAIL owns 31.52% stake in Ratnagiri Gas and Power Co Ltd -- the firm that owns the 1,967 MW power plant and adjacent 5 million tonne a year LNG import terminal.

The power plant and LNG terminal were originally built by now bankrupt US energy major Enron Corp. Ratnagiri Gas and Power Co (RGPPL) took over the project in 2005 after the Enron's bankruptcy. The LNG terminal was 80% complete when RGPPL took over the plant.

GAIL mechanically completed the plant in late 2010 and dredging work of the sea-channel leading to the Dabhol port was completed last year.

He said currently the power plant runs on 5.6 million standard cubic metre per day of natural gas supplied from Reliance Industries' eastern offshore KG-D6 fields.

Dabhol generates 1,000-1,100 MW of electricity currently.

GAIL and power generator NTPC own 31.52% equity stake each in RGPPL while 16.68% is with Maharashtra State Electricity Board (MSEB). The remaining 20.28% stake is with financial institutions.