Signing contracts with companies for gas supply

Indian Oil Corporation will start work on identifying contractors for the Rs 4,320-crore Ennore LNG import terminal from next month.

The company has signed agreements with leading industries in the region to supply the imported Liquefied Natural Gas, according to Mr V. Damodaran, Executive Director, Ennore LNG Project. The terminal coming up 24 km north of Chennai at Ennore Port is to be completed in 2015-16.

Some of the industries that have signed up for LNG include Madras Fertilizers Ltd and SPIC, which need the LNG feedstock, over 400 MW of power plants including Tamil Nadu Electricity Board’s Basin Bridge project, and private power generation companies such as Samalpatti Power, Madurai Power and GMR, which are keen on shifting to LNG.

PPN Power hopes to supplement its fuel supply with LNG from the Ennore Terminal. The multinational company Saint-Gobain Glass is also keen on sourcing LNG from the project, he said.

IOC is hoping that the Tamil Nadu Government will set up at least 1,000 MW of power generation capacity based on the imported LNG, he said.

The City Gas Distribution projects to provide piped gas to homes will also take off, he said.

The terminal with an initial capacity of 5 million tonnes annually will have provision to double its handling capacity.

The initial capacity is based on the demand estimates of about 6.9 million tonnes in 2016.

Once the project management consultant is finalised next month, the oil company will float the first tender to identify the EPC contractor to set up LNG storage tanks of 2.66 lakh cubic metres storage capacity, the other major packages include the marine facilities, gasification and related facilities and construction of buildings.

The Tamil Nadu Government has granted over 130 acres in the Port area for the project. The Tamil Nadu Industrial Development Corporation is expected to take a five per cent stake in the project.

The joint venture details and the partners in the special purpose vehicle are to be finalised in the next two-three months, he said at a seminar on LNG and LNG-based projects organised by the Chemical Industries Association.

IOC hopes to follow the Petronet LNG model in which all the public sector oil and gas companies have a stake.

Meanwhile, IOC is concerned about the Petroleum and Natural Gas Regulatory Board cancelling the licence to Reliance Gas Transportation Infrastructure to set up the Chennai-Tuticorin LNG pipeline due to lack of progress.

IOC will bid if a new tender is floated as work has to start on the line this year if it is to be in place on time to transport the imported LNG, he said.

(This article was published on July 20, 2012)
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