A study commissioned by the Asian Development Bank (ADB) last year found that all ``three serious proposals for LNG terminals in Gujarat, at Pipavav, Hazira and Dahej'' would not be economically viable at once. Another LNG import terminal is on its way at Trombay in Maharashtra, but this project will mostly be for captive gas supplies to the Tata Electric Company's Tromby Power Station.

The Hazira terminal proposed by Enron, the Dahej terminal being promoted by Petronet LNG and British Gas's LNG import venture at nearby Pipavav will fight more or less for the same gas market. All three ventures will (according to the study) ultimately depend on the Gas Authority of India Limited's (GAIL) Hazira-Bijaipur-Jagdishpur (HBJ) pipeline system for distributing the gas.

The Bechtel Consulting-London Economics-CEPMLP-TERI study commissioned by the ADB said the ``concentration of three terminals in this proximity would not be economically optimal.'' It points out that the Pipavav site would require a ``relatively costly pipeline'' to bring the gas to the larger gas market at the Dahej-Hazira region and for an entry point into the the Hazira-Bijaipuir-Jagdishpur pipeline.

The Hazira terminal, barely two km away from Dahej was too close to the Dahej LNG import project. ``The development of a terminal at Dahej or Hazira would remove the necessary baseload demand required for a terminal at Pipavav,'' the report reads, ``Therefore, logically, there is justification for only one terminal in the Cambay area.''

The report bases its deduction on the gas demand projections for Gujarat. The region would have a shortfall by 2002 of 3.7 million metric standard cubic metres of gas per day (MMSCMD). The gas shortfall would necessitate imports of five million tonne of LNG. A million tonne of LNG, when regassified produces four million metric standard cubic metres of gas per day (MMSCMD), capable of energising a 1000 MW plant. The demand-supply gap could be met by Petronet LNG alone, which has recently tied up 7.5 million tonne of LNG supplies from Rasgas-Mobil.

It is pertinent to point out here that ADB has indicated its intention to pick up a stake in Petronet LNG, as has Gaz de France, the French monopoly gas distribution company. Gaz de France has also done the feasibility study for Petronet LNG's Dahej terminal and the company's project director Jacques Gautier was vehement when he said, ``we know that Dahej is the best site.''

Another French company involved in the Dahej project, S. N. Technigaz corroborates the industry belief that there was room for just one LNG terminal in Gujarat. ``Obviously, the project that will succeed will be the one first to bring in the gas,'' said SN Technigaz business development manager (new technologies and special projects) Patrick Genoud. Almost all the LNG import projects target bringing in gas by 2003. Petronet LNG, a company promoted by national oil companies like the Oil and Natural Gas Corporation (ONGC) and GAIL, plans to import five million tonne of LNG at Dahej by the year 2003. The company has already signed an agreement with Rasgas-Mobil for 7.5 million tonne of LNG supplies at at Dahej in Gujarat and subsequently Kochi in Kerala. British Gas has signed a similar agreement with Yemen Energy, but industry sources say the Yemen Energy project would take much longer, as it was a long way from producing gas.

The Indian Natural Gas Company (INDIGAS), a joint venture between Tata Electric Companies (TEC), Tota Gas Power India and GAIL plan to import three million tonne of LNG at Trombay. Some way up north from Dahej along the Gujarat coast, British Gas proposes to import another 2.5 million tonne to five million tonne of LNG. British Gas has a memorandum of understanding (MOU) with power producer the National Thermal Power Corporation (NTPC), while INDIGAS will initially be a captive gas supplier to TEC. The public sector NTPC has also opted for a key stake in Petronet LNG. Market rumours said GAIL (one of the key promoters of Petronet LNG and INDIGAS) had some negotiations with British Gas too for a possible stake in the project. This development, however, could not be officially confirmed. Even so, prospective gas consumer NTPC and distribution company GAIL's haste in joining more than one project only lends credence to the growing opinion that all three ventures may not live to see the light of day. Thedithering has done more harm than good to the ventures, which are only viable if they are bankable.

The support of cash-rich public sector undertakings like ONGC, GAIL, NTPC (not to mention Indian Oil Corporation and Bharat Petroleum Corporation which still want a stake) contribute to Petronet LNG's strength. That strength gets somewhat diluted when commitments get divided, as is the case with NTPC, which wants to have its Petronet LNG cake and eat the British Gas slice as well. Earlier this year in another report, a Bechtel Consulting-London Economics-CEPMLP-TERI study said, ``Import projects will require bankable guarantees on offtake contracts in order to raise the requisite finance.'' It goes on to say that ``As the vast majority of future baseload demand to support such projects will come from the power sector, this will require bankable guarantees from the power producer and where the power producer is not considered sufficiently credit-worthy, the support of state or federal governments.''