Petronet LNG Ltd, the largest liquefied natural gas importer, has leased out 2.25 million tonnes per annum capacity at its Dahej terminal in Gujarat to Gujarat State Petroleum Corp (GSPC).
“GSPC yesterday signed an agreement to book a capacity of 2.25 million tonnes on a long-term and firm basis,” Petronet CEO & Managing Director A K Balyan told PTI here.
While a part of this capacity will be made available from Dahej terminal’s existing 10 million tonnes capacity, the rest will be from the expanded capacity, he said.
Dahej is being expanded to 15 million tonnes per annum by the 1st quarter of 2016. GSPC supplies gas to household and industrial consumers in Gujarat. With stagnant domestic output, the company increasingly buys imported LNG from Petronet and Royal Dutch Shell, which operates the only other operating LNG import facility in the country.
Petronet will earn a tolling and re-gassification charge from leasing out the facility to GSPC, which has its own plans to build a LNG import facility. “It’s a use or pay agreement,” Balyan said.
GSPC will have either import 2.25 million tonnes of LNG annually or pay for usage charges. The agreement was signed by Balyan and GSPC Managing Director Tapan Ray in Dahej yesterday.
Petronet is also building a 5-million tonnes a year plant at Kochi in Kerala. Previously, Petronet had allowed state-owned gas firm GAIL to use annually 2.5 million tonnes capacity at Dahej terminal for importing LNG.
GAIL, which owns 12.5 per cent in Petronet, had under-written the Dahej terminal expansion by Petronet from 10 million tonnes to 15 million tonnes by 2016.
GAIL had recently struck a 20-year deal with Russia’s Gazprom to buy 2.5 million tonnes of LNG but it does not operate an LNG terminal. It will begin receiving supplies from Gazprom in 2018-19.
In December 2011, GAIL had signed an agreement to buy 3.5 million tonnes of LNG a year for 20 years from Houston-based Cheniere Energy Partners LP’s Sabine Pass terminal in western Cameron Parish, Louisiana.
In August last year, it signed an agreement with GDF Suez to buy 12 cargoes of LNG or about 0.8 million tonnes of the fuel from 2013 to 2014.
Fall in output at Reliance Industries’ eastern offshore KG-D6 fields and inability of state-run Oil and Natural Gas Corp (ONGC) to raise production has led to increased reliance on imported gas in its liquid form (LNG).