Petronet LNG ties up with Aussie firm

Gas supply to proposed Kochi terminal to begin in 2009

Petronet LNG has tied up with Gorgon Projects, an Australian company, for supplying natural gas to its proposed LNG terminal at Kochi.

According to sources at the company, the agreement would be formally signed by last week of October for commencing supply of gas by 2009. The proposed Kochi terminal, which will be the second one in the country after Dahej in Gujarat, requires 2.5 million tonnes of natural gas per annum in its initial phase of operation.

The tie-up will provide the required quantity of natural gas to the Rs 1,700-crore project proposed to be set up at Puthuvype, near Kochi. A top official of the company told Business Standard that the bids for transportation, equipment procurement and construction (EPC) would be finalised by the end of the current month as the process was in the final stages.

According to him, the delay in finalising the contract delayed the commencement of work at the proposed site. "Now, it has been decided to commence civil works by January next."

But a further delay is not ruled out as the concession agreement with the Cochin Port is yet to be finalised. The agreement is very crucial as the terminal will be set up on the land owned by the port. The proposed Special Economic Zone (SEZ) may also be delayed due to this.

The proposed SEZ, the first port-based special economic zone in the country, requires an investment of Rs 7,000 crore.

Petronet LNG has shortlisted four companies "� IHI of Japan, Tractebel of Belgium, Techni Gaz and Sofra Gaz of France "� for submitting bids for EPC contract. The representatives of these companies visited the site during the second week of June, but the contract has not been awarded so far.

NYK Logistics, Mitsui, Shipping Corporation of India (SCI), OSK Lines and Kawasaki Nissan Line have shown interest in transporting LNG to Kochi and representatives of some of the companies visited Kochi and held discussions with the port and Petronet LNG officials in June.

The project conceived in 1999 has lost seven precious years due to official delays, while the Dahej terminal became operational in 2004.

According to sources at Petronet, the inordinate delay in the implementation of the project could prove to be a severe setback to the project as the neighbouring state of Tamil Nadu too is planning an LNG terminal at Ennore. This could badly hit the prospects of Kochi terminal especially on the marketing front.