Gail's first US LNG vessel reaches Dabhol terminal; to build

The first liquefied natural gas (LNG) shipment from the US arrived at the Dabhol terminal of state-run gas major Gail here today.

Receiving the first-ever shipment of 1.2 lakh tonne LNG under the long-term contract of 20 years, oil minister Dharmendra Pradhan also announced a Rs 700-crore investment by the newly-created Gail arm Konkan LNG to complete an under-construction breakwater facility, that on completion will make the terminal an all-weather facility.

Currently due to lack of the breakwater the Dabhol terminal, created in FY07 by the original Dabhol power plant promoter Enron Corporation which went bankrupt and abandoned the 1,200-mw power plant, can operate only eight months.

"We've finalised the tender for the breakwater that will be floated very soon and hope to begin work before the monsoons at the earliest or soon after the monsoons," Pradhan told reporters.

A senior Gail official told PTI that the company will be getting 22-24 shipments per annum till the breakwater is built. Once that is done we will be handling 80-90 ships a year.

Gail signed two, 20-year LNG supply agreements potentially worth USD 32 billion for LNG exports from the Dominion Cove Point project in Maryland and the Sabine Pass project in Louisiana in 2011 and 2013 respectively, US Consulate, Mumbai said in a statement.

The minister claimed that the country could negotiate "a very competitive price from the US which offers one of the best prices LNG," without disclosing the average price of the maiden shipment.

"Pricing is a commercial matter that cannot be publicly discussed. All I can assure you is that we have managed one of the best prices which should help the end-consumers," the minister said, adding Dabhol terminal will serve industrial and residential customers in Karnataka, Maharashtra and Gujarat.

He also said the beginning of the oil and gas shipments from the US will boost Indo-US trade and has the potential to raise it by USD 2-3 billion annually, considering massive spike in energy demand, making the country third largest in the world.

"Once this pipeline delivery begins, this will connect the state-run gas major's Kochi-Kuttanad- Mangalore-Bengaluru pipeline," the Gail official said.

Describing the arrival of the first shipment and the conclusion of the long-term contract with the US-based Cheniere Inc as "a new beginning in the Indo-US energy partnership and trade," Pradhan said LNG supplies is linked to the Henry Hub index contract and also "will help achieve the vision of moving towards a gas-based economy."