IOC looks for foreign players to develop LNG terminal

Without waiting for assured long-term supply of liquefied natural gas, Indian Oil Corporation has decided to go ahead with its Ennore Liquefied natural gas (LNG) terminal project. The company has begun discussions with foreign players besides Petronet LNG Ltd (PLL) for jointly developing the Rs 4,500-crore terminal.

The terminal will use spot LNG with base load demand for regassified LNG coming from its refineries. It will bring in a partner to facilitate setting up of the project.

“Among domestic companies, Petronet LNG Ltd (PLL) can be a partner. We are also keen to get an overseas partner who can give us the comfort of long-term LNG supply or has expertise in building and operating an LNG terminal,” said R S Butola, chairman. Indian Oil is a promoter of PLL, the country’s biggest LNG importer. PLL already operates one terminal at Dahej in Gujarat while another at Kochi in Kerala is under construction.

Pending finalisation of a partner, Indian Oil is going ahead with project execution. "It will take four-and-half-years to set up the five million tonne terminal. But once the partners are finalised, we will try to compress the execution time," he said. The company hopes to expand its LNG business in the future.

“We have not been able to contract long-term sourcing of LNG. Therefore, we have taken a view that even without a long-term contract we should go ahead with setting of the terminal since spot market opportunities are always there,” Butola said.

The company plans to use gas to feed its refineries that currently run on costlier naphtha. “Refineries can be linked through pipelines. Gas will be cheaper and better fuel for the refineries. However, we will have to work on pipeline linkage from the eastern coast,” he said.

“If pipeline is not there, there is a possibility that we supply gas to local consumers and swap gas somewhere else.”

Indian Oil-owned Chennai Petroleum Corporation alone can consume three million standard cubic metre of gas a day.

The Indian Oil board has approved investment in the terminal besides getting requisite approvals from the Tamil Nadu government. Land for the project has already been identified.