Soon, imported natural gas could find its way into the country through floating platforms. Bangalore-based GMR Group is exploring alternative ways of getting natural gas, including installation of a floating liquefied natural gas (LNG) terminal on the eastern coast, to support its plans of expanding the Vemagiri power station in Andhra Pradesh.
Due to its inability to ensure adequate gas supplies from domestic sources, Vemagiri Power Generation Ltd, a subsidiary of GMR Energy, is in talks with a Malaysian company for floating the LNG terminal, according to two persons in the know of the discussions.
This is for the first time an Indian company would be using a floating storage and re-gasification unit. GMR is planning to put up an additional capacity of 750 megawatt (Mw) at an expense of about Rs 2,500 crore in Vemagiri. The project is adjacent to its existing natural gas-fired combined cycle power plant of 388.5 Mw, which started commercial generation two years ago.
For the existing plant, the company has a long-term agreement with Reliance Industries Ltd and Niko Resources for sourcing gas from D6 field. Recently, GMR signed an agreement with GE to source turbines and generators for the expansion of its Vemagiri plant, with a 15-year sales and service support agreement. The plant is expected to go on stream by 2012.
A company spokesperson said, “This is purely speculative and it is not the company policy to comment on such speculation.” Sources close to the development said the terminal’s capacity could be between four and six million cubic meters per day. “Pricing of the gas and details of the floating vessel are being discussed at present,” sources said.
Industry experts say there is ample gas available in the global gas market. If a company goes in for a short-term arrangement of three years, it will have to pay around $10-12 per million British thermal unit (mBtu). In a long-term arrangement, gas is available at $15-16 per mBtu.
Few more power players are also looking at such arrangement so that they can go for an end-to-end integration of the total power production chain. “GMR will have to put in place the infrastructure for re-gasification of the gas. At present, there is no such facility on the eastern coast. GMR may either have to put up a platform in the sea or fit the LNG tanker with vapourisers for conversion of LNG into R-LNG, which would be pumped ashore via pipes. It may take GMR 8-12 months before its plans fructify,” said the LNG head of a public sector unit.