Petronet struggles with constrained Kochi plant

By Nidhi Verma

NEW DELHI (Reuters) - India's biggest gas importer Petronet LNG is scouting for ways to recoup millions of dollars invested in setting up its Kochi terminal, which has been operating at a fraction of its capacity.

Liquefied natural gas (LNG) supplies could have helped industrial expansion in Kerala, but land-related issues have delayed two inter-state pipelines that would link customers with the terminal.

Petronet is now exploring the possibility of tapping demand in the Andaman and Nicobar islands, in Sri Lanka and in leasing part of the storage at its 5-million-tonne-a-year LNG plant, Managing Director A.K. Balyan said.

Russia's Gazprom and U.S.-based Excelerate Energy are among the companies that have shown interest in leasing the storage, Balyan added.

The Kochi plant operated at about 1 percent of its capacity in January-March as one of its two clients, Fertiliser and Chemicals Travancore Ltd (FACT), halted purchase from Jan. 10 due to financial constraints, Balyan said.

The second client of Kochi terminal is Bharat Petroleum Corp's Kochi refinery.

Petronet may divert its third spot cargo planned for arrival at Kochi in June to its 10-million-tonne-a-year Dahej plant in Gujarat if there is no firm commitment from consumers including FACT, head of finance R.K. Garg said.

Petronet aims to operate its Dahej terminal at 15 million-tonnes-a-year capacity by November 2016, Balyan said.

Demand for LNG in Gujarat, which has a well laid out pipeline network, is so robust that Petronet has already leased out almost half of Dahej's capacity to state companies from 2017.

Petronet buys 7.5 million tonnes of LNG a year under a long-term agreement with Qatar's RasGas at Dahej terminal.

It has also signed a deal to buy 0.8 million tonnes of LNG from RasGas in the fiscal year that began in April, a company source told Reuters on Wednesday.

(Reporting by Nidhi Verma; editing by Douglas Busvine and Jason Neely)