Shell and GDF accelerate FSRU plans for Kakinada

Vol 17, PW 19 (08 May 14) Midstream & Downstream

Shell, GDF Suez and GAIL joint venture Andhra Pradesh Gas Distribution Corporation (APGDC) are waiting impatiently for India's elections to conclude on May 16 so they can accelerate work to set up a Floating LNG Storage and Regasification Unit (FSRU) off Kakinada in Seemandhra, a new state carved out of Andhra Pradesh.

APGDC tells us it will announce the date of a public hearing - tentatively scheduled for June - by May 15, a formality ahead of environmental clearance. This will be closely followed by a tender to hire a Project Management Consultant in October, with an award expected by January 2015.

Then comes an EPC tender for the jetty in February 2015 and a dredging contract tender to increase water depths from the five metres now to 12 metres needed for a FSRU. "By June 17 (next month) we hope to have a MoU in place between all stakeholders," confirms a source.

"This will allow financial investments to begin." He adds the final equity breakdown will see APGDC hold 48% in the Kakinada FSRU Special Purpose Vehicle while Shell and GdF will each hold 26%.

Earlier the breakdown proposed was APGDC (45%), Shell (26%), GdF (26%) and Kakinada Sea Ports (3%). Next month (June) stakeholders want to sign a Port Service Agreement with KSP.

In one area there is still no agreement: whether to buy or hire the Rs4000cr ($664m) FSRU. Shell, it seems, would rather buy a purpose-built unit while GdF would prefer to hire one.