GAIL wants floating LNG vessels offshore India

Vol 14, PW 1 (01 Jul 10) Midstream & Downstream
     

GAIL wants to bring floating LNG storage and regasification units offshore India to supply R-LNG to the country’s rapidly industrialising southern states.

PETROWATCH learns Tamil Nadu and Karnataka authorities are asking GAIL to find additional sources of gas and believe Floating Storage and Regasification Units (FSRUs) are the best short-term option. As a result, GAIL has been in talks with Japan’s Mitsui O.

S.K.

Lines to evaluate their commercial potential. “Both parties have been meeting for some time,” says an industry source.

“One meeting took place around June 15.” Mitsui has given GAIL some basic cost estimates, he adds, for hiring such vessels.

To be successful, any FSRU should factor in the cost of LNG. “By itself the basic FSRU unit is a first generation LNG tanker and cheap,” we hear.

“But the technology (to store and regasify LNG on board) is expensive. GAIL must take a call on that.

” According to a GAIL source, the company is considering three such FSRU units: two off the east coast near Chennai and Pondicherry in Tamil Nadu and one off Mangalore or Karwar in Karnataka on the west coast. “No LNG import terminal is likely to come up onshore Tamil Nadu (on the west coast) in the immediate future but there’s huge gas demand,” says GAIL.

“Our idea is to have an FSRU unit off Chennai to feed the market for two or three years. If domestic gas comes in by then, we can let the FSRU go.

” GAIL is uncomfortable about investing in any land-based east coast LNG terminal when Reliance, ONGC and GSPC are widely expected to make more eastern offshore gas discoveries in the next five to eight years. “When that happens it will be difficult to sell R-LNG from a fixed import terminal,” says GAIL.

“Having a FSRU will be definitely cheaper. Now this kind of technology is available, we must use it.