Indian Oil has booked one million tonne a year capacity in the proposed liquified natural gas (LNG) terminal by Swan Energy at Jafrabad in Gujarat, B Ashok, chairman, told FE. The terminal has a total capacity of 5 million tonne per annum (mtpa).
Ashok, however, said that IOC was ‘not looking at’ buying equity in the Swan’s LNG project. In 2014, the IOC board gave its go-ahead for the 5 mtpa LNG terminal at Ennore in the Kamarajar Port. The project would cost about R5,151 crore, where financial institutions IDFC and ICICI have been roped in as strategic partners.
Swan Energy had approached three public sector companies — ONGC, IOC and BPCL — to book capacities to LNG at its terminal at Jafrabad in Gujarat.
Interestingly, these government-owned companies also hold a 12.5% stake each at Petronet LNG. Petronet has two operational regassification terminals at Dahej in Gujarat and at Kochi in Kerala. While the Dahej terminal has a nominal capacity of 10 mtpa, the Kochi terminal has a capacity of 5 mtpa. The company is in the process to build a third terminal at Gangavaram in Andhra Pradesh.
Industry watchers are wary of the fact that despite being stakeholders of Petronet (which is into business of marketing LNG), ONGC, BPCL and IOC are considering to book capacity at Swan Energy’s upcoming terminal.
If Swan Energy could rent out entire capacity, it gives boost to its business model leading to banks and financial institutions willing to lend for the LNG terminal. Nikhil V Merchant, managing director of Swan Energy, earlier told FE that the LNG terminal at Jafrabad is likely to cost about R5,500 crore. Nearly 70% of the cost would be raised through debt.
On December 16, 2013, Swan Energy informed stock exchanges that it has received an environment clearance from the Centre for setting up a floating storage regassification unit (FSRU) at LNG import terminal near Pipavav in Gujarat.
The construction of the terminal is expected to begin later in 2015 and the project is likely to be operational by 2018.
LNG is expected to account for an increasing portion of demand at least in the next several years as Indian energy firms attempt to reverse the country’s recent domestic production declines, said US Energy Information Administration. “Increasing LNG imports will depend on the pace of expansion in regassification terminal capacity and pipeline infrastructure connecting gas to markets that currently lack access,” it said.
India was the world’s fourth-largest LNG importer, following Japan, South Korea and China, and consumed almost 6% of the global market, according to data from IHS Energy.