Shell's LNG project delayed by 2 months

Managerial contractors face penalty for missing deadline

Shell India' liquiefied natural gas (LNG) project at Hazira (near Surat) in Gujarat, the first private sector 2.5 million tonne per annum LNG terminal in the country, is being delayed by two months.

The project, which was to be commissioned in December, will now have to settle for the same sometime in February -March following a delay by its project managerial contractors.

Estimated at $600 million, Shell's Hazira project is among the largest greenfield foreign direct investments in the energy sector in India.

A senior executive with Hazira LNG Private Ltd told Business Standard that, "The LNG teminal will be delayed by two months since its two managing contractors - Hazira Cryongenic Engineers, a French company and Hazira Marine Engineers - did not meet their contractual deadline. They will be accordingly penalised for the delay." However, he refused to give the details regarding the penalty.

The executive pointed out that Shell usually has managing contractors to set up the project "with a project team - secondees from Shell - who monitor all activities of the contractor and comply with project specifications".

Anglo-Dutch oil major Shell, which re-entered India after over two decades, established two project companies Hazira Port Private Limited for private multi-cargo port and Hazira LNG Private Ltd for regassification terminal in Gujarat in . It also set up Shell Hazira Gas private Limtied to market gas across India.

Though the project is being delayed, Shell has already embarked on expansion plan to raise its LNG capacity to five million tonne per annum and eventually scale it up to 10 mtpa.

Shell has already set up two, 160,000 cubic meter of LNG storage tanks which will be later scaled up to four storage tanks and has set up 17 km of send-out pipeline to send gas to GSPL's gas grid.

Shell is planning to import gas at its Hazira terminal in the first quarter of 2005 is looking at Malaysia, Australia, Brunei and Oman "where all the Shell's LNG units are undergoing expansion". The executive claimed that the port with an estimated investment of 4 200 million will be operational in the first quarter of 2005.

The executive pointed out that Shell intends to use their own tankers to transport LNG from Shell's various units across the globe.