Qatar Petroleum to help set up Mangalore LNG terminal

ONGC plans Rs 25,000 cr LNG plant with Ashok Leyland

The government has invited Qatar Petroleum for joining Oil and Natural Gas Corporation (ONGC) in setting up a liquefied natural gas terminal at Mangalore in Karnataka.

Officials told Business Standard that natural gas for this terminal could be sourced from Qatar's North Field and sold to power projects like the one being planned by the Hindujas in Tamil Nadu.

ONGC had in early April announced the signing of a memorandum of understanding (MoU) with Ashok Leyland Project Services, an associate of the $800-million commercial vehicle major Ashok Leyland, for its Rs 25,000-crore mega project involving an LNG terminal, power plant and petrochemical complex.

Officials said United Kingdom-based Hinduja brothers enjoyed political clout in Iran and Qatar and had assured ONGC of 5 million tonnes of LNG annually for the terminal. The group's power plant will require around 0.8 mt gas from this terminal.

"The option of receiving natural gas at both Mangalore and Ennore was explored but it was found that it was cheaper to receive LNG from West Asia at Mangalore and then pipe it to Ennore than setting up a regasification facility in Ennore itself," said an official.

The Hindujas had earlier this year signed a similar MoU with Indian Oil Corporation for the latter's proposed LNG terminal in Ennore but officials claimed they were now keen on ONGC since it could set up a project largely on the strength of its own "balance sheet". Senior IOC officials, however, claimed that the MoU was still valid and some progress would be made soon.

ONGC planned to construct a jetty and a regasification terminal at a cost of about Rs 3,000 crore while investing another Rs 22,000 crore in an extraction plant, petrochemicals and power stations.

The company can proceed with the Mangalore project by turning it into a subsidiary and without any equity participation from any other company. But explaining the reason behind inviting the Qataris, officials said this was being done in order to have cross-investments in the two countries.

ONGC had plans to set up a power plant in Mangalore with the idea of selling it to the Karnataka state power utility. The LNG gasification plant was to come up in the proposed Mangalore special economic zone, which was also to have a gas-based power plant.

Electricity generated from the power plant in Mangalore was planned to meet ONGC's captive requirements for the petrochemical and other projects.

Surplus power was to be sold to the state government. It had also planned to set up a C2-C3 extraction plant and a petrochemical plant.

Gas project

• Natural gas for Mangalore terminal to be sourced from Qatar's North Field
• Gas to be sold to power projects like the one planned by Hindujas in Tamil Nadu
• Hindujas assure ONGC of 5 mt of LNG annually for the terminal
• ONGC to construct a jetty and regasification terminal costing Rs 3,000 cr