ONGC, India?s largest oil and gas producer, plans to increase its footprint in the LNG business and tap the growing demand of imported gas. Towards this, the PSU is setting up an LNG terminal in Mangalore and would pick up equity in a similar project being developed by Indian Oil Corporation in Ennore, Tamil Nadu. Though ONGC has a small stake in Petronel LNG, it cannot market LNG like Gail and oil marketing PSUs.
Japan?s Toyo Engineering will finish its feasibility report on Oil and Natural Gas Corporation?s (ONGC) proposed liquefied natural gas (LNG) import terminal in Mangalore by the first half of 2014, said ONGC chairman Sudhir Vasudeva.
ONGC will partner Mitsui of Japan and oil retailer Bharat Petroleum Corporation Ltd (BPCL) for setting up the 2.5 million tonne per annum (mtpa) terminal which will entail investments of R3,000-4,000 crore. The terminal will be subsequently expanded to 5 mtpa.
From the demand side, Mangalore is a growing industrial centre with the presence of Mangalore Refinery & Petrochemicals Ltd (MRPL), petrochemical complex ONGC Mangalore Petrochemicals Ltd (OMPL) and the Mangalore SEZ (MSEZ). Also Mangalore hosts an iron ore industry, fertiliser plants and their ancillary industrial units. Currently, these industries are using heavy liquid sources like fuel oil and naphtha for their energy and feedstock needs.
India has less than 1% of the world?s known natural gas reserves. To augment gas supply, the country either needs to set up LNG terminals or rely on transnational pipelines.
Besides setting up the Mangalore terminal, ONGC is keen to get a foothold in IOC?s upcoming plant in Ennore. ONGC is in talks to buy a 26% stake in IndianOil?s R4,320-crore LNG import plant, which is to be completed by 2017. ONGC estimates an unmet demand of 21.5 million standard cubic meters per day (mmscmd) in the Ennore catchment area, which will rise to 41.7 mmscmd in ten years. Overall in southern India, it sees an unmet demand of about 90 mmscmd.
Like ONGC, IOC and Hindustan Petroleum Corp Ltd (HPCL), too, have unveiled plans to set up LNG import facilities on East and West coasts. Natural gas demand is expected to reach 746 mmscmd by 2029-30 against the present consumption of 127 mmscmd.
ONGC has a 12.5% stake in Petronet LNG Ltd, the firm that owns and operates LNG import facilities at Dahej in Gujarat and Kochi in Kerala. But ONGC does not have any rights to market the imported gas. ONGC is also one of the six firms that has been shortlisted for buying a 25% stake in GSPC LNG Ltd?s proposed terminal at Mundra in Gujarat.
According to a recent ONGC-Boston Consulting Group (BCG) report, domestic production and supplies from transnational pipelines will not be able to keep pace with the demand for natural gas in India and only LNG can bridge this gap.
The report titled ?LNG-Global Challenges and Opportunities and Imperatives for India? said that domestic production is expected to reach 230 mmscmd by 2029-30 while pipelines will add 30 mmscmd to the supply. So a gap of 486 mmscmd (131 million tonnes per annum) is expected between demand and supply, representing a huge opportunity for LNG.
The report added that the recommendations of the Rangarajan committee raising the prices of APM gas to $8.4 mBtu will dramatically increase LNG prospects in India, making it attractive to several sectors.