All these LNG terminals in India not needed

Vol 20, PW 16 (04 May 17) Midstream & Downstream

Lack of coordination and planning could mean the loss of billions of dollars of taxpayers' money and bad loans invested in setting up LNG terminals and FSRUs across India.

That's the stark warning from bankers contacted by this report worried that India is on track to have more than 55m t/y of LNG import capacity when actual demand is unlikely to exceed 30m t/y. Most of the proposed LNG projects are likely to use only 25% of installed capacity, they add.

What's needed, we hear, is a clear oil ministry comparison of actual LNG supply against demand to see if it matches government policy and the eagerness of state-owned companies to spend money on doubtful LNG projects. "State-owned companies are wasting taxpayers money with their LNG terminals," claims an investment banker.

"Even privately-promoted terminals will add to the bad loans of banks when they find capacity utilisation is so low." Also questioned is IndianOil's upcoming 5m t/y Ennore terminal near Chennai, one of the few projects where work is actually underway. "What was the need for Ennore when Kochi is present on the other side of the country?" wonders a banker.

"A pipeline could have been laid to feed this (Ennore) market." Gujarat alone will soon have 25m t/y capacity with Dahej at 15m t/y, Hazira at 5m t/y, and Mundra likely to be ready with another 5m t/y by August 2018.