Indian Power Firms Turn to LNG

The stagnation in India’s gas and coal production has led to rise in interest in the liquefied natural gas (LNG) business, despite it being the most expensive fuel for power generation.

The India Express said in a report that companies like Indian Oil Corporation (IOC) are looking at LNG business. The state run firm is planning a 5 million tonne (mt) terminal at Ennore Port by 2015. Private firms like Reliance Power too are looking to set up a terminal in cooperation with Shell in Andhra Pradesh.

Oil India, Relaince-BP, GAIL and Petronet LNG are other names planning LNG terminals, Indian Express said.

LNG can be imported from West Asia, Central Asia, South America and Australia via specialised vessels and needs to be regasified and stored before being taken to the consumer through pipeline networks.

“Of course, there is a desire by many companies to set up LNG terminals, but there are no concrete plans in many cases and it will certainly take (some) time. We expect some of the proposed projects could come up not before 2016,” Petronet LNG director finance RK Garg said, Indian Express reported.

As for domestic gas, the current production stands at 135 million standard cubic metres per day (mscmd) and the demand is around 243 mscmd.

The shortfall in gas supply from domestic sources strengthens the case for larger capacities of LNG handling in the country.

Some analysts are, however, sceptical about the rush to set up LNG terminals due to high price as they are linked to crude.

Currently, the two LNG terminals operational in the country are Dahej of PLL and Hazira of Hazira LNG (HLPL).

The LNG capacity in the country is just about sufficient to meet existing demand of gas in the market but the situation is expected to ease by 2016 when many of the proposed projects of oil companies go onstream. It is expected that if most of the proposed projects are commissioned, the country will have LNG regassification facility to process 180 mscmd of gas by 2016.