Petronet may pull the plug on Kerala project

Petronet LNG has threatened to dump a plan to build its second 2.5 million tonne-per-annum import terminal at Kochi if Kerala is unable to make a commitment to help sell 70 per cent of the gas.

Petronet has identified Mangalore in neighbouring Karnataka as an alternate location for the project.

"We have told the Kerala government that we will not be able to pursue the project if we don't have customers. We are awaiting their reply," a company director said.

Petronet had chosen Kochi as the site for its second LNG terminal, the first being Dahej in Gujarat, following plans by Siasin Energy to build a new 1200-megawatt gas-fired power plant there and by National Thermal Power Corporation to convert its 350 mw plant at Kayamkulam in the state to a 2000 mw facility.

The Siasin project has been shelved while NTPC is threatening to set up its own captive LNG terminal in Kerala.

"Once we get the commitment, we will make the terminal and run within 18 to 22 months," he said.

Indian Market Research Bureau, which explored the market potential of the Rs 2,000 crore venture, had identified local independent power producers as potential customers.

Besides Kayamkulam and Siasin, the Enron-promoted Kannur power project was identified as potential customer but the project was stalled after the collapse of the US energy firm. Kerala chief minister A K Antony has written to the Centre to impress upon NTPC to buy gas from Petronet only, sources said.

"If we don't get a market in Kerala, we might move to Mangalore," the director said.

Incidentally, Petronet has bid for supplying gas to the 2,000 mw power plant at Bidadi on the outskirts of Bangalore.

"We see a huge market in Karnataka and a pipeline from Mangalore to Kochi can feed the Kerala market too," he said.

Petronet imported the country's maiden LNG cargo in January-end and will begin commercial sale of re-gassified LNG from April.

The company, promoted by GAIL India, Indian Oil Corporation, Oil and Natural Gas Corporation and Bharat Petroleum Corporation, has a pact with Rasgas of Qatar for sourcing the gas that has been liquefied at minus 160 degrees celsius.