Shell will expand Hazira to 10m t/y if market wants it

Vol 8, PW 16 (03 Nov 04) Midstream & Downstream

Shell is confident that the market for regassified LNG in India could justify the expansion of its 2.5m t/y LNG terminal in Gujarat to 10m t/y.

You expand when the time is right to expand, reveals a source. If the market can absorb 5m t/y then Shell would have no problem in doubling capacity to 10m t/y.

For now Shell is open-minded about the way its LNG business in India will develop and has no fixed timetable for expansion. Shells confidence comes from watching rival Petronet-LNG and the apparent ease with which it is selling the LNG it imports from RasGas at Dahej.

Shell is clear that the start-up capacity of its Hazira LNG terminal this year or early next will be 2.5m t/y and that the first expansion to 5m t/y will be market-driven. Everything depends on the offtake from customers and supply from Shells side.

Shell sees no pressing need to add a third or fourth LNG tank to the two it is constructing to accommodate increased LNG imports. Instead, Shell is banking that the LNG throughput of the two existing tanks will be seamless, allowing ships to berth and unload LNG as fast as it is regassified and piped out to customers.

Shell is confident that it has pre-invested enough in the existing terminal to allow for eventual expansion to 10m t/y without the addition of much infrastructure. It can take up to three years to build a LNG tank, we learn.

It takes more time to build a tank than anything else. Crucially, Shell has designed the terminal with two breakwaters to allow for the construction of a second jetty that would allow two LNG tankers to berth simultaneously, essential for a 10m t/y terminal.

On price, Shell believes that the economies of scale resulting from a 10m t/y LNG terminal and multi-cargo port alongside could conceivably bring the end price of LNG for customers down by as much as $0.20 per mmbtu.

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