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LNG: Petronet taking the lead

Nov 14, 2000

With the hint of a slow down the Government is preparing to announce another round of reforms. The new package is also likely to include a new liquefied natural gas (LNG) policy. In energy markets, LNG is the new buzzword with players expecting the natural energy resource to be the next growth area. In FY99, the production of LNG in the country was 25.7 b cubic meters (bcm). Whereas, the demand for LNG was in the region of 140 bcm. If we meet our GDP growth targets the demand for the energy resource will simultaneously spurt. Consequently, growth in LNG supply will have to be sharp if the demand-supply mismatch is to be bridged.

Recently, the Government promoted, Petronet LNG Ltd. and the Qatar based RasGas advanced their sale purchase agreement of LNG by six months to December 2003. Subsequently, Petronet will commence construction work of the 5 m tonne terminal at Dahej, Gujarat.

The 2.5 m tonne Kochi terminal will be taken up for construction after completion of the Dahej project. The Kochi terminal is expected to go on stream by the beginning of 2005. Both these projects are expected to have a construction period of 18 to 24 months.

For procurement of fuel the company has entered into a 25 years fuel supply agreement with RasGas. Bids for the shipping contract for the transport of LNG have also been invited. Under the current regulation the shipping consortium is to be lead by a foreign company having significant expertise and experience in the field of LNG shipping.

Dahej and Kochi will be amongst the first LNG terminal projects to get of the ground. Similar such projects have also been planned by the private sector. As per the petroleum ministry, LNG terminal capacity of 52.5 MMTPA is expected to be set up in the next 5 years. Currently, however, all eyes will be on the new policy to be announced.

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