As per the proposal which is under review, Petronas will source the gas from its fields in Malaysia and transport it to Kakinada. From here, LNG will be made ready and marketed by IOC and, possibly, Enron Oil. "Enron has only indicated its interest to participate and is still to reach a final decision," sources said.

IOC has made it known that it is keen on getting into the LNG business on its own even while the Government has formed Petronet LNG specifically for this purpose. The Fortune 500 company's reasoning is that it makes more sense at this stage to get going on creating infrastructure in those areas where Petronet does not plan to operate. The Kakinadaproject's investment details are yet to be worked out.

The ministry of petroleum and natural gas is apparently open to the idea of allowing oil PSUs to set up their own infrastructure for LNG (liquefied natural gas) imports so long as this does not compete directly with Petronet LNG.

Petronet LNG, the joint venture of IOC, GAIL, ONGC and BPCL, has already announced its intention to construct two LNG terminals in Dahej and Cochin at an $1,200 million. These are scheduled to be commissioned only four years down the line when the oil sector will be completely deregulated.

Both IOC and BPCL, which will pick up 26 per cent each in the Dahej and Cochin projects, will now be allowed to set up their own terminals following the petroleum ministry's directives. Ironically, prior to this, GAIL was allowed to join hands with Total of France for an independent project to import LNG.

At that time, IOC was keen on participating in the plan but the Government rejected the idea as this would be conflicting directlywith Petronet LNG. However, GAIL was permitted to step in and replace IOC, a move that still remains inexplicable considering that the former is also an equity holder in Petronet LNG. Sources say that both HPCL and BPCL would not be too inclined to go-ahead independently for their LNG plans as this would involve an enormous outlay of funds. For the present, it is only IOC that has the required financial muscle for the task.

The Fortune 500 company has also been building a strong association with Petronas of Malaysia to work in key petro-related activities. In the local circuit, potential partners could be both ONGC and GAIL, companies in which IOC has picked up equity to the extent of ten per cent and five per cent respectively. India's need for LNG is expected to substantially increase in the future with the commissioning of new power plants which would require the fuel as feedstock. Existing utilities which use naphtha are also planning to switch over to LNG as it is not only a cleaner option but is alsoeasy to handle and cost-effective.

Two LNG terminals have been planned in Gujarat alone, one to be commissioned by Petronet in Dahej and the other by British Gas in Pipavav. This, in turn, has spawned a controversy as the National Thermal Power Corporation has expressed its interest in picking up a stake in both. The equity holders of Petronet feel that this is not fair as NTPC would end up participating in the equity of competing ventures.

The petroleum ministry is now faced with the option of either giving NTPC a slot in Petronet LNG and invoke the ire of other oil companies or insist that it confine its interests either to the Dahej or Pipavav project. No decision has been taken yet and the issue will now have to be resolved jointly by the ministries of power and petroleum.