Ennore stands a better chance than Krishnapatnam

Vol 8, PW 8 (14 Jul 04) Midstream & Downstream

GAILs plan to revive Ennore brings it into direct competition with a rival plan promoted by Indian Oil, Petronas and BP to relocate their proposed LNG terminal from Kakinada to Krishnapatnam.

Both Ennore and Krishnapatnam have a common market in the industrial hinterland of southern Andhra Pradesh and Chennai. Compare both locations to see that Ennore has a better chance of success than Krishnapatnam.

Ennore is only 25-km north of Chennai while Krishnapatnam is 120-km north and in Andhra Pradesh. Ennore has a (natural) draft of 13 metres for LNG tankers while Krishnapatnam will have to be frequently dredged to maintain the required draft.

Krishnapatnam is prone to cyclones from the Bay of Bengal while Ennore is more sheltered. Crucially, GAIL can use its 163-km gas pipeline network in the Cauvery Basin for Ennore, while IOC-BP-Petronas have no network to speak of for Krishnapatnam.

GAIL wants to develop the CNG and piped natural gas markets in Chennai and possibly Bangalore with regassified LNG from Ennore and is clear it wants to set up only the LNG terminal and not the power station. Contrast this with the baggage of the power station envisaged in the original proposal for Kakinada that IOC and partners have to carry to Krishnapatnam.

Another driving motive for GAIL is emerging competition with Reliance to control gas infrastructure. We want to develop our own source of regassified LNG, adds GAIL.

We want our own LNG import terminal. GAIL also remembers the stiff resistance it faced from IOC and partners when it unsuccessfully lobbied the oil ministry to be allowed to join their project.

But now, with the prospect of its own LNG import terminal, GAIL is keen to get Ennore operational fast to benefit from an early mover advantage. We have to be in the market in advance of Krishnapatnam.