A recent move by the National Thermal Power Corporation (NTPC) to locate a liquefied natural gas import terminal in Kochi has put a question mark on the future of Petronet LNG's 2.5 million tonne import project in the same port.
NTPC has recently invited bids for 2 million tonnes of liquefied natural gas for its 350 Mw Kayamkulam project, whose capacity is being increased to 1,950 Mw.
Responding to bidders' queries, NTPC said it had appointed a consultant for feasibility study of the Kayamkulam and Kochi port locations for setting up an LNG terminal.
If the NTPC import terminal came up at any of these locations, which were 120 km apart, the need for another import terminal in Kochi would be obviated, industry sources said.
"If this happens, the Petronet LNG project in Kochi should be considered as good as dead," they said.
"We are constantly reviewing the situation. If Petronet LNG does not get the NTPC contract for LNG supply to the Kayamkulam project, it will look at other industries in Kerala and Karnataka," B K Chaturvedi, petroleum secretary and chairman of Petronet LNG, told Business Standard here today.
"The Petronet LNG project is on. Pre-project activities have been completed. Land has been acquired for the project and environmental clearance is expected soon," S C Mathur, managing director of Petronet LNG, said.
He said the company had already spent Rs 30 crore on the project and Gail (India) Ltd had started survey for laying a Kerala-Karnataka pipeline for transporting regassified LNG.
Industry sources said besides the Kayamkulam project, there was no other industry existing either in Kerala or Karnataka that could sustain another LNG import terminal in Kochi.
In any case, the recent spurt in gas discoveries in various parts of the country has increased the availability of inexpensive natural gas in the country, thereby shrinking the market for LNG.
They said even the government-sponsored Natural Gas Master Plan, 1999, had recommended that the minimum distance between two 2.5 million tonne LNG import terminals should be at least 300 km to make these projects viable.
Regassified LNG can be supplied economically through pipelines up to a distance of 300 km.
However, 80 per cent work on the 5 million tonne Dahej terminal of Petronet LNG has been completed and the first shipment of LNG from Rasgas is expected in December.
