More customers than expected for Kochi R-LNG

Vol 10, PW 5 (29 Jun 06) Midstream & Downstream

Petronet-LNGs eagerness to secure a supply contract for Kochi is understandable.

Eager customers are expected to start lining up for regassified LNG from the completed terminal. Fears that industrial demand in Kerala - Indias most literate yet economically backward state is not sufficient to justify a dedicated LNG terminal are proving groundless.

Petronet-LNG expects no shortage of customers. Demand for R-LNG, we are told, is much more than Kochis initial capacity of 2.5m t/y.

Already the power ministry has staked a claim to 2.1m t/y of R-LNG from the Kochi terminal for NTPCs proposed expansion of the nearby Kayamkulam power station from 350-MW to 2300-MW. It will not be possible to agree to this request, we are told.

There are other customers who have been promised LNG from Kochi. Petronet-LNG plans to divide up the R-LNG from Kochi equally between its stakeholders and offtakers: Bharat Petroleum, GAIL and Indian Oil.

BPCL has staked claim to at least 40% of the R-LNG, arguing that the gas is needed for its 7.5m t/y subsidiary Kochi Refineries as well as for other customers in the chemical and fertilisers sectors in and around Kochi. BPCL also stresses that it agreed to take just 10% share of R-LNG from Dahej on the understanding that Kochi R-LNG will be more equitably divided.

Other potential customers in the region are state-owned Fertilisers and Chemicals Travancore (FACT) and a new 350-MW power station adjacent to the LNG import terminal proposed by the local technology to energy NeST Group, with annual turnover of $200m a year. Work on the terminal site continues apace.

Land filling is pressing ahead and a boundary wall has been erected. On 12th June, Petronet-LNG held a pre-bid meeting for shipping consortia interested in the contract to build two tankers to ferry LNG to the terminal.

Five shortlisted consortia must submit price bids by 31st July. By the end of this month, a pre-bid meeting will be held for EPC contractors, who have until 15th August to submit price bids.

By 15th September, Petronet-LNG hopes to award the shipping and EPC contracts.