HPCL changes its mind on LNG terminal location

Vol 15, PW 10 (17 Nov 11) Midstream & Downstream

Hindustan Petroleum, the country’s third largest state-owned refiner, wants to build a LNG terminal on India’s west coast, not the east coast, as previously announced.

HPCL issued newspaper advertisements on November 7 inviting bids from “consultants with sound technical and financial capabilities” to carry out a “detailed feasibility study for a proposed onshore LNG import and regasification terminal at Chhara in Gujarat.” HPCL began selling tender documents on November 8 and they will remain available until December 13.

Interested companies must submit bids for the feasibility study by December 20 and HPCL plans to open technical bids the same day. Many are surprised by the switch to Chhara and the west coast, one of 11 ports selected by the Gujarat Maritime Board for development by privately-owned companies.

After all, HPCL chairman and managing director S. Roy Choudhury announced plans to set up a LNG terminal on India’s east coast, at a press conference held in Mumbai end-September.

Why the change of mind Chhara is being developed by one of India’s oldest construction conglomerates, Mumbai-based Shapoorji Pallonji & Co. “HPCL and Shapoorji are comfortable with each other,” explains an industry source.

“Perhaps that’s why HPCL chose Chhara.” But a HPCL source downplays the significance of the proposed feasibility study.

“We are at a very preliminary stage,” he says. “It is too early to comment on the LNG terminal or its capacity.

Let the feasibility report come in then everything will unfold.” But he stresses that HPCL is determined to enter the LNG business and says Chhara is a good location for a terminal because Gujarat has a well developed gas pipeline network.

This infrastructure could give HPCL easy access to western and northern gas markets. “We should have entered the LNG business long ago!” he exclaims.