The Hindu Business Line : Petronet to begin work on Kochi LNG terminal

Kolkata, Oct. 8 Petronet LNG is set to take steps towards implementation of the much awaited Rs 2,500 crore LNG terminal at Kochi beginning this month.

The 2.5 million tonne terminal – to be completed in mid-2011 - will be fourth such project in the country and first in South India. It also the first terminal to be located in a major port.

According to a senior company official, in a meeting held last month, the Union Ministry of Shipping and Cochin Port Trust has cleared the concession agreement (including tariffs to be charged towards pilotage, wharfage and other support services).

It is now awaiting the formal clearances from related ministries including the Union Ministry of Finance before entering into a formal pact with Petronet by October 31.

The Centre’s commitment in the project has set the ball rolling at Petronet’s end too.

IHI, the sole bidder

The company has started the final round of negotiation with Ishikawajima-Harima Heavy Industries (IHI) of Japan for awarding the EPC (engineering, procurement and construction) contract.

The proposal for awarding the EPC will be finalised before the next Petronet board meet scheduled on October 15.

IHI previously emerged the sole bidder in the project. The contract, however, could not be awarded as Petronet was waiting for finalisation of the concession agreement.

“We have recently received initial approvals for the project. The concession agreement and EPC contracts will be formalised this month,” the Managing Director, Mr Prasad Dasgupta, confirmed to Business Line.

“The project is now set to enter the implementation phase,” he added.

LNG supplies

The company has already identified Chevron-operated Gorgon project in Western Australia for importing up to 3.5 million tonnes LNG for 25 years beginning 2011-12.

Of the total, 2.5 million tonnes would be handled at the Kochi terminal.

The rest will be handled at Dahej in Gujarat.

The financial negotiations for the supplies are yet to take place.

“We have asked for long term supply from Gorgon. It is yet to be firmed up.

“However, we are reasonably certain that we may get anything between 2.5 and 3.5 million tonnes from the Chevron operated project,” Mr Dasgupta said.

In no hurry

Sources, however, added that since the company has adequate time before the Kochi terminal was implemented, Petronet was in no hurry to firm up supplies and would leverage the situation to get the best deal from prospective LNG suppliers.

Related Stories:
‘Concession pact for Kochi LNG terminal by month-end’
Petronet in talks with 3 bidders for Kochi LNG terminal
Kochi LNG terminal will be completed by Feb 2011