Shell looks to meet growth in LNG trucking in Asia

By Jessica Jaganathan

SINGAPORE (Reuters) - Royal Dutch Shell is planning to build a truck loading facility at its Hazira liquefied natural gas (LNG) terminal on India's west coast as it looks to meet demand from industrial users, a top company official said on Friday.

The facility, which could be ready by next year, will be used to supply industrial demand through trucking in places that can't access supply from the grid, said Steve Hill, executive vice president at Shell Energy.

"It has a big potential growth ... in India because energy supply reliability is a big issue in India," he said at a media briefing in Singapore, referring to LNG being transported in trucks to industrial users.

"There hasn't been as much supply infrastructure in place, but some of the import terminals are now putting the truck loading facilities in place so that's opening up that option."

Shell Gas B.V, a unit of Royal Dutch Shell Plc, holds a majority stake in the Hazira LNG Terminal and Port in a venture with a unit of France's Total SA.

LNG trucking works well for locations off-grid, with China and India the two obvious markets, Hill said.

Gas hauled by trailers is seen growing to a tenth of China's total gas consumption of around 240 billion cubic metres (bcm) in 2017, from 5.6 percent in 2014, but is a new development in India.

CHINA AND INDIA DEMAND GROWTH

Shell expects LNG demand to rise again in China this year as the world's second-largest importer of the super-chilled fuel extends a program to switch from coal to cleaner gas beyond the capital Beijing to large industrial cities, Hill said.

"The underlying policy that's driving this is basically community heating or small in-city industrial users switching (the) boilers from coal to gas," he said. "This is structural demand conversion."

The full effect of China's drive to switch factories and millions of homes from coal to gas to curb harmful emissions will be felt this year, he added.

India had the potential to be the next biggest growth market as it faced similar factors to China, Hill said.

"They are both countries with big populations, developing rapidly growing economies, (and) air quality challenges where gas has low penetration in the energy mix," he said.

"It's harder to predict the timing in India, but ultimately I'm quite confident we'll see rapid growth in gas demand in India."

(Reporting by Jessica Jaganathan; editing by Richard Pullin)