Dhamra LNG terminal expansion on the anvil, says Adani Total CEO

Dhamra LNG terminal, India's newest and only terminal on the Eastern coast will take advantage of the Urja Ganga and Indradhanush gas grids, to service the region

On the sidelines of the India Energy Week (IEW) in Betul (Goa), Adani Total Pvt Ltd chief executive officer (CEO) Satinder Pal Singh tells Subhayan Chakraborty that Dhamra LNG terminal, India's newest and only terminal on the East Coast, will take advantage of the Urja Ganga and Indradhanush gas grids, to service the region. He stressed that large LNG volumes will appear in the global market before 2025, and argues that low capacity utilisation rates at terminals are not necessarily a bad thing. Edited excerpts:

What is Adani Total Pvt Ltd's investment pipeline like?

We have the cheapest additional capacity available in eastern India today, by a long margin. The region will witness a surge in gas demand. Objectively speaking, we will be best placed to fulfil that. Dhamra LNG has already pre-invested in the expansion of the terminal. We have enough space for a third tank. Our jetty and send out pipeline are sized for 10 metric tonnes per annum (MTPA). We have enough space for additional vaporisers and powertrains. We can trigger an expansion very efficiently in Dhamra. Looking at the way the pipelines have been expanding, I don't see any reason why Dhamra shouldn't be announcing an expansion very soon.

Does gas evacuation remain an issue for terminals?

Connectivity for gas infrastructure in India has grown amazingly in the last three months. The Urja Ganga and Indradhanush pipelines have expanded in the East and Northeast regions, respectively. Now they're going southwards and westwards. This is wonderful news, considering how gas grids were growing earlier.

But capacity utilisation rates at terminals have been low for a long time...

India needs to have more infrastructure simply because we have to become a more sophisticated buyer. If someone is trying to run all LNG terminals at 100 per cent capacity, it means they are an LNG price taker. They will have no flexibility when the supplier comes, given the limited slots. This affects their commercial terms. The value in sourcing LNG effectively is much more than utilising the terminals. It's not a bad thing if LNG infrastructure is not being utilised fully, as long as the spare capacity that is created, is being utilised smartly to leverage commercial advantage on sourcing. The average utilisation rates of major buyers such as Japan and Korea are 30-35 per cent. Each LNG deal still effectively works as a bilateral deal, and the more flexibility you have, the better.

The Parliamentary Standing Committee on Petroleum has pointed out that India needs to cut down on rising incidence of spot purchases for LNG. Given that negotiating long-term deals is a lengthy affair, how does the industry balance the two?

Buyers have been slower in switching to natural gas, than what I would have expected. Availability has been an issue. The price shocks after the Ukraine war did not help. But in the last six-seven months, we've seen a spate of long-term deals. This includes most notably Petronet LNG with Qatar Energies at IEW, as well as IOC with ADNOC and Total. There was also GAIL with Adnoc in the past few months. These signify the maturing of the Indian customer, and show they are moving away from the spot model. For a country as large as India, definitive steps towards creating infrastructure are needed. The minute you start making long-term deals, the whole infrastructure aligns with that. They are good market signals, and show we are clearly trying to increase the share of gas in our energy mix.

Is it true that China has already tied up most of the upcoming volumes through long-term deals, and we may be late?

We are clearly not late for the party. In any case, there's no point crying over spilt milk. Even if we are late, that's no excuse for not taking a decision today. If you look at the projects in the US, Australia and Africa, you can be sure there is a lot of LNG coming to the market very soon. By 2025, a lot of the projects are coming on stream.