Gangavaram to sign pact for LNG terminal today

New Delhi-based Petronet LNG Limited will be signing a memorandum of understanding (MoU) with Gangavaram Port Private Limited, the operator of the deepest port in the country, on Wednesday to set up an LNG terminal project in Andhra Pradesh.

When contacted, a senior official of Gangavaram Port, confirmed the development. The official, however, refused to divulge the details of the MoU or the investments being proposed for the said project.

According to a senior official in Andhra Pradesh government, which holds a little less than 11 per cent equity in the port project, Petronet is looking at setting up an LNG terminal facility with an initial capacity of 5 million metric tonne per annum (mmtpa). The investments are expected to be in the range of Rs 5,000 crore to Rs 6,000 crore, he said.

The state government is also expected to have some say in the project by virtue of being a stakeholder.

Petronet chief executive officer and managing director, A Balyan, is expected to sign the pact with the promoters of the port. The company currently operates a 10-mmtpa terminal at Dahej on the western coast and is in the process of building a five-mmtpa terminal at Kochi in Kerala down south.

The need for LNG infrastructure on the east coast of the country is acutely felt ever since the natural gas production in the K-G D6 block fell sharply. With the dip in natural gas supplies, the existing gas-based power projects in the state have been operating at below 50 per cent installed capacity, while another 3,000 Mw capacity is ready but has no gas to operate.

The state government official said that LNG infrastructure was a necessity not just for making up for the shortfall in natural gas supplies to power projects and other industries, but also to help stabilise the gas prices going forward.

“With the US becoming the net exporter of natural gas, thanks to the shale gas production, our companies can import LNG from that country. This will also impact the prices of LNG being imported from Qatar and also keep a check on the price of the domestic natural gas,” the official said.