The Hindu Business Line : Lack of supply may jeopardise Kochi LNG terminal project

EVEN though it is almost certain that Kochi LNG terminal would become a reality, senior industry sources here have expressed apprehension that any complacency on the part of the State Government might result in a delay in the commissioning of the proposed terminal. The Prime Minister, Dr Manmohan Singh, is expected to lay the foundation stone in January.

There are enough reasons, they claimed, to arrive at this inference. Already bottlenecks have emerged on the proposed $22-billion deal to import five million tonnes of LNG from Iran.

Besides, 2.5 million tonnes of LNG from RasGas, Qatar, which was earmarked for Kochi terminal when the SPA was signed long ago, is almost certain to be diverted to Dahej as the expansion of this terminal is under way.

No substitute supplier has so far been identified for the Kochi terminal. The uncertainty over the supply from Iran appears to have compelled Petronet LNG Ltd (PLL) to look for suppliers in Malaysia and Australia and this exercise is still in the primary stages, the sources said.

It is understood that since there is good demand for LNG from Dahej, PLL might not delay the expansion of this project for the sake of Kochi terminal.

If the reported ban on supply of US patented commercially proven LNG liquefaction technologies to Iran is enforced then the supply from Iran would be delayed, causing a cascading effect on the prospects of the proposed terminal here.

Other sources of supply are yet to be identified, deal processed and finalised. The price would become a major factor.

Therefore, as it stands now, if the Kochi terminal were to be commissioned by the projected schedule of September 2009, the only chance available for it is to bring the 2.5 million tonne of LNG from Qatar and in that event the Dahej expansion might have to be delayed, they said.

At the same time, though the PLL sources were persistently reiterating that the Kochi terminal project is well ahead of the proposed ONGC terminal at Mangalore, the delay that could happen for want of timely supply of LNG to the terminal here might pave the way for it being overtaken by the Mangalore terminal.

If it happens, the setting up the terminal here might be in jeopardy, depriving the State of the huge investment, they predicted.

Even apprehensions are in the air about the possibility of NTPC not expanding the capacity of its Kayamkulam thermal plant to 2,300 MW now. However, a market study initiated by KRL had projected that there would be enough takers for 2.5 million tonne of LNG from the Kochi terminal even without NTPC, they added.

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