Naphtha based urea plants asked to shift to RLNG to avail subsidy

Govt plans to pay subsidy directly to farmers rather than routing it through urea manufacturing plants

In order to cope with shortage in natural gas availability, the department of fertilizer has advised naptha based urea units to import regassified liquefied natural gas ( RLNG).

However it is not in favour of extending subsidy to these units using naphtha as fuel. The ministry has stopped paying subsidy to naphtha based urea plants since June 2014 which was the deaddine by which such plants should have moved to gas.

By shifting to RLNG, subsidy may resume. Currently, the ministry plans to pay the subsidy directly to the farmers rather than routing it through urea manufacturing plants.

Meanwhile, the Ministry of Power continues with its earlier advisory to all the developers of gas based power plants not to plan projects based on domestic gas till 2015-16.

This is even when presently 10,757 MW capacities (both public & private) are lying idle from the projects commissioned and
the normative total investment corresponding to this capacity is about Rs. 43,028 Crores.

These matters were discussed to augment natural gas production and its efficient allocation to priority sectors.

In an official update the ministry of oil and petroleum stated that in order to augment natural gas supply, Gas Authority of India Ltd (GAIL) has signed two LNG offtake agreements with Sabine Liquefaction LLC, USA and Gazprom Marketing and Trading Singapore.

Further, GAIL through its indirectly owned subsidiary, GAIL Global (USA) LNG LLC, executed a Terminal Service Agreement with Dominion Cove Point LNG LP, USA for booking capacity rights of 2.3 MMTPA.

With regard to US terminals, both Sabine Pass and Dominion Cove Point terminals have got conditional approval from US, Department of Energy (DoE) for LNG exports to non-FTA countries and hence, there is no restriction on export of LNG to India from these terminals.

While LNG exports from Gazprom (Russia) to India do not have any restrictions, the export of LNG from USA requires obtaining a license from US, Department of Energy (DoE), stated an official. However, GAIL does not have any ownership/partnership in any LNG terminal abroad.

As per the plan of the ministry, the capacity will be augmented through a combination of re-gasification of LNG terminals and domestic output.

RLNG capacity is expected to grow from 61.2 million standard cubic metres per day (mmscmd) at present to 147.6 mmscmd in 2016-17 in a phased manner. Similarly, domestic production of natural gas is expected to firm up to 150 mmscmd from 100 mmscmd at present by 2017-18.

Re-gasification refers to imported natural gas at LNG terminals. According to official sources, by the end of 2013-14, the availability of the regasified liquefied natural gas (R-LNG) is expected to grow accordingly from the present capacity of 61.2 mmscmd to 79.2 mmscmd by the end of 2013-14.

This is primarily due to increase in capacity of Kochi terminal of Petronet LNG by 5 million tonne per annum (MTPA). This project received its environmental clearance and coastal regulation zone clearance in January 2013.