Japanese group bags $250 mn Petronet order

Petronet LNG has awarded a $250 million contract to a consortium led by Japan's Ishikawajima-Harima Heavy Industries for building two liquefied natural gas storage tanks at Kochi, a senior company official said today.

Petronet LNG is setting up a 2.5 million tonne per year LNG terminal at Kochi, with a provision to scale it up to 5 million tonne.

"The letter of intent for building the two LNG storage tanks have been awarded to IHI consortium on a nomination basis," the official told NewsWire18.

The IHI-led consortium had earlier been awarded another contract by Petronet to double the capacity of its existing Dahej LNG terminal in Gujarat to million tonne.

Petronet shares, which were trading in the negative, rose on the news.

Petronet had initially shortlisted three consortia""two led by French companies Sofregaz and SN Technigaz, and the third by IHI""for the engineering, procurement and construction contract to build the Kochi terminal.

The official said it has now been decided to divide the entire work into three packages, including LNG storage tanks, jetty, offshore and onshore work.

"While the storage tanks have been awarded to IHI, fresh financial bids have been invited from the three consortia for the remaining work," he said.

The total cost of the Kochi LNG terminal is estimated at $900 million.

The project is already lagging by nearly two years on delays in firming up LNG supplies and signing of concession agreement with Kochi Port Trust.

Petronet is in the final stages of negotiations to import 2.5 million tonne per annum LNG from the Chevron-operated Gorgon project in Western Australia for 25 years.

The company is hoping to sign sales and purchase agreement for importing LNG from Australia in a few months and likely to start receiving supplies from 2013.