GAIL denies sabotaging VGS-promoted FSRU

Vol 18, PW 11 (29 Jan 15) People & Policy

GAIL has rubbished allegations it is trying to derail a rival LNG Floating Storage and Regasification Unit (FSRU) project off Kakinada by pressurising Andhra Pradesh authorities not to clear it.

At issue is a $507m, 3.6m t/y LNG FSRU project promoted by US-based VGS Cavallo and Antwerp-based shipowner EXMAR. “We are not even aware there is such a project,” says a well-placed GAIL source.

“So how can anyone accuse us? We’re only concerned with our project which is going ahead.” Yet industry sources say in early January Andhra authorities asked VGS to shelve the project as, “GAIL had threatened to walk out of the Kakinada LNG FSRU project” jointly promoted with Shell, GDF Suez and the state government.

“VGS told (Andhra authorities) that giving in to GAIL’s threat would result in a monopoly in the (LNG supply) market and (consequently) no competitive pricing, putting customers at a disadvantage,” we learn. Andhra authorities have so far not sent an official notice to VGS, which is awaiting state government clearance to fix a public hearing date ahead of environment ministry clearance from Delhi.

In private VGS believes state authorities are deliberately delaying the public hearing under pressure from GAIL and plans to appeal to oil minister Dharmendra Pradhan before the end of this month (January) “seeking justice against GAIL’s high-handedness.”