IOC claims it is best placed for Ennore LNG project

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

Indian Oil has not lost heart.

We have put in our claim, says an IOC source. Now it is up to the Tamil Nadu government to choose.

Indian Oil says its case for Ennore is strong. We can sell 1m t/y gas to the power station, he adds.

Chennai Refineries (an IOC subsidiary) will require 800,000 t/y gas. We can easily sell the balance in Tamil Nadu and Andhra Pradesh.

IOCs new love for Ennore raises doubts about its commitment to the proposed Krishnapatnam LNG terminal, where it has an alliance with Petronas of Malaysia. Ennore and Krishnapatnam cannot co-exist, we learn.

It has to be one or the other. Within IOC theres a growing consensus that Ennore is better than Krishnapatnam because it is located just 25-km north of the state capital Chennai.

Ennore is even further from (Reliances landfall point at) Kakinada than Krishnapatnam. IOC believes Ennore port is also better developed than Krishnapatnam, which needs dredging and a breakwater.

Only a jetty needs to be added at Ennore. Theres abundant land around Ennore for the LNG terminal.

Other advantages to Ennore are the allocation by the Tamil Nadu Industrial Development Corporation of 4500 acres of land nearby for industrial projects including a LNG import terminal. In Chennai, meanwhile, its not yet clear whom state authorities will select from GAIL, Indian Oil or ONGC to lead the Ennore LNG terminal project.

The government has not made up its mind, says a source. They say they prefer the one who makes out a case earlier.

In private one official tells us state authorities believe ONGC and IOC are better placed than GAIL because of their stronger balance sheet. But the (GAIL-led) Dakshin Bharat Consortium has the advantage of being with the project for four years.

The Dakshin project originally included an 1830-MW power station but this has now been scaled back to 750-MW.

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