The Hindu Business Line : Kandla port plans to set up LNG terminal

THE Kandla Port Trust is planning to set up a two-million-tonne per annum LNG (liquefied natural gas) terminal at a greenfield site near the existing major port in Gujarat.

The Trust has recently given an in-principle approval to invite expression of interest from parties planning to set up an LNG/CNG terminal on build-operate-transfer (BOT) basis on the western coast of India.

The proposed terminal would come up at Tekra, 27 km from Kandla, where the port has already planned to construct berthing facilities and related infrastructure.

The proposed site is located outside the Kandla creek and offers a draught of about 14 metres.

"In order to meet the growing demand of trade and as a long-term investment, we have proposed to develop berthing facilities at Tekra. The LNG terminal would also come up at Tekra," port sources told Business Line.

The Indian Institute of Technology (IIT) Madras has already carried out a preliminary study of the proposed location of berthing facilities and said that the project was feasible.

When contacted, the Kandla port Chairman, Mr A. Janardhana Rao, confirmed that the Trust had cleared the proposal for the LNG terminal.

"We have taken an in-principle approval from the Trust board. Now we will explore ways to go forward. As running an LNG terminal is not our core competence, we will tie up with an entrepreneur who has experience in the field of LNG and CNG," Mr Rao said.

A conceptual plan for the project has already been prepared but the details would be formulated after getting expression of interest, he said.

The initial proposal is for two million tonnes, but it would go up to four million tonnes in the second phase, he said.

The two existing LNG terminals in the country are located in Gujarat.

While Petronet LNG has a 5-million-tonne per annum terminal at Dahej, Shell and Total commissioned a 2.5-million-tonne facility earlier this year.

The Gujarat Government has said that it wants two more LNG terminal sites in order to cater to the expected demand in the future.

Hindustan Petroleum Corporation Ltd has also planned a 5-million-tonne facility at Dahej.

Several new LNG terminals may be in offing, but as of now, the Shell terminal is virtually idling as international gas prices are ruling much higher than what Indian consumers are willing to pay.

Petronet has a 25-year contract with Ras Gas under which it is allowed to import LNG at a concessional price for five years from Qatar.

Industry watchers say that once the five-year period gets over, gas prices in India would also rise to international rates.

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