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India's Petronet LNG turns focus to poorly supplied east coast

NEW DELHI/MUMBAI (Reuters) — India’s biggest gas importer Petronet LNG Ltd wants to build up its LNG regassification capacity in the east of the country where supply is limited, after focusing till now on the west, the CEO said on Thursday.

Petronet LNG
Photo courtesy of Petronet LNG.

Natural gas accounts for about 6.5% of India’s overall energy needs, far lower than the global average. The government wants to lift it to 15% in next few years.

India has four LNG terminals to import gas, but all of them are in the west. They have combined annual capacity of about 22 MMt. The Indian Oil Corp’s Ennore terminal, the first on the east coast, will become operational next year.

Petronet wants at least a 25% stake in the Ennore terminal, Managing Director and CEO Prabhat Singh said.

“Having something on the east is looking good because you have so many terminals coming on the west,” he told a news conference, adding Ennore “looks attractive to us immediately.”

The Oil Ministry approved a plan in 2016 to fund 40% of a 1,500-mi gas pipeline costing $1.99 B to connect five poorly served eastern states of India in a bid to encourage gas usage.

Singh said it would cost less to source gas from east coast terminals, which are closer to international suppliers, than piping the fuel across country from the west coast.

He put the saving at about $1 per MMBtu, 13% less than the LNG price on the west coast.

India’s economic development has concentrated in western and southern states, where infrastructure is better and energy supplies more accessible through a network of pipelines.

The eastern region has many small-scale industries and several gas-fired power plants are shut because a lack of cheap gas supplies in the region make running costs too high.

Petronet is planning to expand its Dahej LNG terminal in the western city state of Gujarat to handle 17.5 MMtpy by July 2019 from 10 MMtpy. It also operates a 5 MMtpy LNG terminal at Kochi in the southern state of Kerala.

Reporting by Nidhi Verma and Promit Mukherjee; Editing by Edmund Blair

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Editorial comment
-Adrienne Blume
According to GIIGNL’s 2018 Annual Report, global LNG trade expanded by 3.5 Bft3d in 2018, to 38.2 Bft3d—a record 10% increase.
Power, LNG projects drive pipeline construction in Africa
-Shem Oirere
Increasing public investment in gas-fired power plants in Africa, the continuing recovery in global oil prices and persistent insecurity in key producer markets, such as Nigeria, are likely to impact gas transmission pipeline projects on the continent, even as more international companies express interest in the region’s stranded gas resources.

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