Adani-GSPC-Essar plan LNG terminal

Long-term sourcing contract for the 10 mtpa project yet to be signed.

A consortium of energy-to-transport majors, Adani group, Gujarat State Petroleum Corporation (GSPC) and Essar Oil, plans to spend Rs 10,000 crore to build a liquefied natural gas (LNG) regassification terminal at Mundra in Gujarat.

An announcement in this regard is likely soon, "probably in a week to 10 days," according to Rajeev Sharma, CEO (gas business), Adani Group.

The 10 million tonnes per annum (mtpa) terminal is likely to come up alongside the Mundra port and facilitate the movement of LNG ships into the terminal. 
 

POWER POINTS LNG terminals
Operator	Location	Capacity	After expansion
Existing
Petronet LNG	Dahej	5	10
Shell	Hazira	2.5	5
Proposed
Petronet LNG	Kochi	2.5	5
GAIL	Dabhol	5	-
ONGC	Mangalore	5	10
IOC	Ennore	2.5	5
Adani-GSPC	Mundra	10	-
Figures in mtpa

"We are still in the process of working out how much stake each of the companies will hold in the project," Sharma said.

However, the companies are yet to ink a long-term LNG sourcing contract. "We are talking to various countries in the Gulf region," Sharma added.

However, analysts say that considering the tight LNG supply across the world, it may be forced to buy LNG from the spot market.

Spot LNG is currently trading at $14-16 per million British thermal unit (mBtu), while long-term LNG contracts range from $4 per mBtu to $8 per mBtu.

Sharma said 2009 would be a good time to seal long-term LNG contracts as there was likely to be spare supply in the global markets then, with a few gas liquefaction plants coming up across the world.

The proposed LNG terminal, work on which is expected to begin even "before the LNG tie-ups are completed", will be the third LNG regassification terminal in the country. The other two operational terminals are the Petronet LNG-run terminal at Dahej and the Shell India terminal at Hazira, both in Gujarat.

"The Mundra terminal is likely to be completed by 2012-13," Sharma said. He added that if Adani was able to source LNG before the completion of its terminal, it might regassify the fuel at Shell's Hazira terminal.

Two other LNG regassification terminals are under implementation. The terminal at Dabhol in Maharashtra is being built by Ratnagiri Gas & Power, the operators of the power plant at Dabhol, and the other terminal at Kochi is being constructed by Petronet LNG.

Neither Petronet nor Ratnagiri has been able to tie up long-term LNG contracts for their upcoming terminals.

Petronet LNG is also expanding is existing 5 mtpa terminal at Dahej to 10 mtpa, while Shell is expanding its terminal to 3.5 mtpa from 2.5 mtpa. It plans to reach a final capacity of 5 mtpa.

Indian Oil Corporation also plans to set up an LNG regassification terminal at Ennore in Tamil Nadu. The project has, however, not yet been implemented as IOC has been unable to tie up for sourcing LNG.

Gas from fields across the world are liquefied in special terminals and then transported long distances across the world in cryogenic ships. The gas, in the form of LNG, is kept liquefied at -160 degree celsius in ships.

In the country of its consumption, the LNG is regassified in other terminals and transported to end consumers through pipelines.