Gujarat to set up two LNG terminals

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Ahmedabad, Aug 19: The Gujarat government has decided to set up two LNG terminals along the Kutch coastline in the state. Envisaging a large front-end investment of Rs 1,600-1,700 crore for setting up the terminals at Kutch, the state government has initiated discussions with petroleum majors British Gas and IndianOil to participate in the project.

With an initial terminal capacity on 2.5 mmscmd, state government has identified several prospective sites near Mundhra, between the Navinal island and the Bocha Creek for the project.

In its recent study on development potential of Kutch, Gujarat government outlined the prospects for setting up terminals at Kutch. These include action agenda for terminal development, project configuration and possible constraints. Sources close to the state energy and petrochemicals department have confirmed that Gujarat government is exploring options for import of natural gas for the proposed LNG terminal.

The state government is pursuing discussions with countries like Qatar, Oman, Kuwait, Yemen and Turkmenistan, which have substantially large reserves of natural gas. Currently, the state government is pursuing dialogue with Abu Dhabi Gas Liquification Company (ADGAS), Qatargas and Ras Laffan LNG for proposed LNG project at Kutch, sources added.

The study also includes the most critical issue of pricing of LNG in the state. According to the agreement on ‘principal terms’ for Oman-India gas pipeline, the base price of gas delivered at Bhachau in Kutch was fixed at $2.4 per mmbtu at crude price of $15 per barrel and $2.6 mmbtu for crude price of $18 per barrel.

Based on 10% customs duty, 3% of total investment cost dedicated to operations and maintenance, and expected rate of interest of 16%, the expected price of LNG would be between $3 and $3.5 per mmbtu, prior to regassification.

Under the aegis of GIDB, the detailed report on “development potential of Kutch”, incorporating the details of the proposed LNG terminal project in the region, has been submitted to Gujarat government.