Andhra Pradesh has signed two separate memoranda of understanding (MoUs) for setting up a floating LNG terminal at the Kakinada deep water port. The first MoU is a terminal company agreement between Andhra Pradesh Gas Distribution Corporation (APGDC) — a JV between AP government and GAIL, GDF SUEZ and Shell. The second MoU is the trading company agreement between GAIL, GDF SUEZ and Shell and covers both the sourcing of LNG and the marketing of the regasified LNG from the terminal.
The Kakinada LNG terminal will use the Floating Storage and Regasification Unit (FSRU) with a peak capacity of 5 million tonne per annum (mtpa) with the provision to double the capacity. The FSRU will be constructed with a cost of R1,800 crore initially.
The terminal will use high-end technology and will be one of the first of its kind of PPP projects in India, the state government claimed. The Kakinada port was found suitable for a project of this nature, owing to its availability of a natural break-water in the Hope Island — a barrier that protects against the impact of high seas.
The first MoU supports the development/execution of the terminal. APGDC, GDF SUEZ and Shell will have 48%, 26% and 26% equity in the project, respectively. The objective of APGDC is to establish the regional gas pipeline distribution network and to develop city gas distribution in various major cities within the Andhra Pradesh and to develop infrastructure for import of natural gas in the eastern coast.
In the second MoU, GAIL, GDF SUEZ and Shell will have 48%, 26% and 26% equity in the project, respectively. The MoU was signed in the presence of chief minister N Chandrababu Naidu and BC Tripathi, CMD, GAIL, CEO of GDF Suez Philip Olivier, Anindya Chowdhury of Shell India and other executives from the companies.
Speaking on the occasion, CM Naidu said both domestic and international partners who have come together, will bring the best expertise, technology and speediness from all over the world to complete the project within 18 months.
He described the LNG terminal as a great opportunity in the development of a project that shall ensure continuous availability of natural gas and support the government’s gas grid which is one of the five grids.