H-Energy plans Rs 3,700 cr investment for LNG project in West Bengal

H-Energy has lined up an investment of Rs 3,700 crore to set up a 3-million tonne (mt) regasification plant and a pipeline in West Bengal which will carry gas not just in Bengal but will also export to Bangladesh.

While an investment of Rs. 1,500 crore will be made to set up the terminal and the plant, another Rs. 2,200 crore will be spent on setting up a pipeline which will transport the gas from offshore Digha to Khulna which borders Bangladesh.

“Around 2 mt will be supplied to Bangladesh with whom we have a 20-year contract and the rest can be sold locally or as required”, Darshan Hiranandani, the company’s managing director and CEO said.

The construction is expected to commence during June-July this year and the project will be commissioned by December 2020.

According to the company, the project will operate on a model where customers will have the option of booking re-gasification capacity in the plant and source liquified natural gas themselves or order for re-gasified gas delivered to their plant through gas marketing companies.

The project dates back to August 2015 when H-Energy won a tender issued by the Kolkata Port Trust for commission and operation of a Floating Storage and Regasification Unit (FSRU).

This FSRU will be located 115 km into the sea within the Kolkata Port Trust boundary limits and will be connected to the Onshore Receiving Facilities at Contai through a 115 km long subsea pipeline. The project has completed all major technical and commercial feasibility studies and has also received the Coastal Regulation Zone clearance from the environment and forestry ministry.

Hiranandani said this project can be scaled up to 5 mt but the decision will rest upon the demand for gas as well as the business performance. It is expected to break-even in a 7-10 year timeframe.

The company will also be commissioning its 4 mt Jaigarh FSRU project in Maharashtra by April this year while the 60-km long Jaigarh-Dabhol pipeline is expected to start operations in May 2019. For the Jaigarh project, the company has already pumped in Rs 2,065 crore.

H-Energy, via one of its subsidiaries, has entered into a Port Service Agreement and Sub-Concession Agreement with JSW Jaigarh Port or Ratnagiri Jetty Based Berth for setting up an LNG regasification terminal at the port.