IndianOil in talks with Dhamra port for LNG terminal

State-owned Indian Oil Corp (IOC) is in talks with L&T-Tata Steel-owned Dhamra Port Co Ltd for setting up a 5 million tons a year LNG terminal in Orissa, the firm's director incharge of new businesses has said.

The LNG import and regassificiation facility at Dhamra port will be besides the Rs 4,320 crore terminal IOC is planning to set up at Ennore in Tamil Nadu, the firm's Director (Business Development), A M K Sinha, said here.

"We are looking at the possibility of setting up a LNG import facility at Dhamra port to meet gas demand in Orissa and West Bengal. Our refineries at Paradip (in Orissa) and Haldia (in West Bengal) alone need 2.5 million tons of LNG," he said.

Situated between Haldia and Paradip, the port at Dhamra will be one of the deepest ports of India with a depth of 18 meters, which can accommodate super cape-size vessels up to 180,000 DWT. Dhamra Port Co Ltd, a 50:50 joint venture of L&T and Tata Steel, has been awarded a concession by Government of Orissa to build and operate the port.

Sinha said IOC has begun work on the proposed LNG import facility at Ennore. "We have awarded the contract for front-end engineering and design (FEED) study Foster Wheeler."

IOC had in 2007 put on hold the 2.5 million tonnes a year LNG import-cum-regassification terminal after huge gas finds off the east coast made the project economically unviable.

But the output from Krishna Godavari basin fields falling short of the target, LNG imports are being talked as an alternative to meet the demand.

IOC and its subsidiary Chennai Petroleum Corp Ltd (CPCL) would be the lead promoters of the Ennore project.

Interestingly, Petronet LNG Ltd, the nation's largest liquefied natural gas importer, too is looking at setting up a LNG import terminal on the east.

Petronet, which is expanding its currently operational Dahej terminal in Gujarat to 15 million tons from 10 million and is setting up a 5 million tons facility at Kochi in Kerala by 2013, is looking at sites in Oriss and Andhara Pradesh for its third terminal.

IOC is an equal promoter of Petronet along with GAIL India, Oil and Natural Gas Corp and Bharat Petroleum Corp.

Sinha said like Dhamra, Ennore too would have captive users in its refinery at Chennai. "We have an advantage as we have our own captive gas requirement to be met."