Pipeline delay to hit Petronet's capacity usage

Petronet LNG Ltd, the country’s biggest gas importer, will operate its upcoming five-million-tonne Kochi terminal at just 20 per cent of its capacity for a year, due to delay in commissioning of the supply pipeline.

The Rs 4,500-crore Kochi terminal will be Petronet’s second and the country’s third liquefied natural gas (LNG) terminal after Dahej and Hazira. Petronet operates the Dahej terminal, while the Hazira terminal is run by Dutch oil and gas giant Shell.

The terminal will supply gas to its various consumers through the 1,114-km pipeline from the LNG terminal at Puthuvypeen, Kochi, to Mangalore and Bangalore. The pipeline is being constructed by state-run GAIL (India) Ltd, which is also a promoter of Petronet, at a cost of Rs 3,700 crore.

The Kochi terminal is at pre-commissioning stage. “I think we will be ready to send out gas by October. However, the pipeline is delayed,” A K Balyan, managing director and chief executive officer, told Business Standard.

“This means the full utilisation of our capacity will come only in 2013-end. We have been requesting GAIL to expedite the work. It should have been done on priority,” he added. Petronet will do some direct marketing of gas till the pipelines are ready.

The Kochi terminal, the first LNG terminal along the southwest coast of the country, will cater to the enormous demand of natural gas for power, fertilisers, petrochemicals and various other industries in the southern states.

Balyan said the first phase of the pipeline from the terminal to Ambalamukal and Udyogamandal areas will be ready by October and could carry around one million tonne gas annually to consumers like Bharat Petroleum Corp Ltd’s refinery and Fertilisers and Chemicals Travancore Ltd’s fertiliser plant.

He, however, said the main consumers fall in the pipeline route to Mangalore and Bangalore, which will not be commissioned before 2013-end. “We were told earlier pipeline will be commissioned along with the terminal,” he said.

Petronet has recently decided to set up its third regasification terminal at Gangavaram in Andhra Pradesh. The third terminal will have a capacity of five million tonnes and will be set up at an investment of Rs 4,500 crore. It is also in the process of expanding the Dahej LNG terminal capacity from 10 to 15 million tonnes.