Kakinada LNG project still on despite Reliance find

Vol 6, PW 20 (04 Dec 02) People & Policy

NOT EVERYONE, it seems, is impressed with Reliance's lucky strike offshore Andhra Pradesh.

We understand BP, Petronas and Indian Oil are pursuing their 2.5m t/y LNG import project at Kakinada - also in Andhra Pradesh - unmindful of the Reliance find next door. A source tells this report the three partners met in IOC's Delhi office on 16th November to take stock of the situation following Reliance's 31st October announcement.

"There were a lot of apprehensions," he reveals, "because of the media hype around the Reliance discovery." According to the Kakinada partners, Reliance's claim "needs a lot of verification before we take it seriously". Two key questions about Reliances discovery need answers: what are the exact reserves and the eventual price of the gas "It will be interesting to know if the Reliance reserves figures are independently audited and at what price they plan to sell the gas." At Kakinada promoters are planning an LNG import terminal, regassification facilities and a 1,000-MW power plant.

Convinced the project is viable, BP, Petronas and IOC are preparing to sign a Joint Collaboration Agreement. It should have been signed last month, but Reliance's announcement forced the partners to call ajoint meeting to review the project.

Current plans are to sign it this month. "We haven't changed any of the project parameters," we learn.

"The feasibility report we gave to the Andhra Pradesh government in February last year stands." Kakinada's promoters reject charges of overconfidence. Instead they reckon the Reliance discovery can be turned to their advantage.

"We will get a good price for LNG when we float global tenders. We are more confident than ever this project will go ahead."