Virtually every port in India is looking to set up liquefied natural gas (LNG) receiving terminals to cash in on the country’s efforts to reduce its dependence on traditional and costly fossil fuels and switch to the more efficient, cleaner and ecofriendly option.
It is also an indication that locally produced gas—despite the grandiose plans announced by explorers—may not be enough to meet India’s huge appetite for the fuel for use in power plants, fertilizer units, petrochemical plants, automobiles and households.
India has four LNG re-gasification terminals at Dahej and Hazira in Gujarat and Dabhol in Maharashtra and Kochi in Kerala, all on the country’s western seaboard.
LNG is natural gas cooled to minus 162 degrees celsius. At that temperature, natural gas condenses into liquid, occupying less space, making it easier to transport over long distances. LNG is loaded onto specialized ships and delivered to re-gasification terminals where it is re-heated, turned into gas and distributed to customers through pipelines.
On the western coast alone, more facilities are being planned at Mundra, Pipavav, Chhara and Nana Layja, all in Gujarat. New facilities are also proposed at Kakinada, Gangavaram, Krishnapatnam, Ennore, Dhamra, Paradip and Karaikal on the eastern coast. All of these are expected to ramp up capacity to 50 million metric tonnes per annum (mmtpa) of LNG from the existing 19.8.
India’s LNG imports are estimated to reach 150 million metric standard cu. m per day (mmscmd) by 2017 and 258 mmscmd by 2022 from the existing 63, according to the oil ministry. Ten mmtpa is equivalent to 40 mmscmd of LNG.
The potential for imported LNG has attracted firms such as Shapoorji Pallonji Group, Reliance Industries Ltd, Swan Energy Ltd, IL&FS Maritime Infrastructure Co. Ltd, Allcargo Logistics Ltd, Gangavaram Port Ltd, Krishnapatnam Port Co. Ltd, Petronet LNG Ltd, and state-run firms such as Indian Oil Corp. Ltd, Hindustan Petroleum Corp. Ltd, GAIL (India) Ltd and Gujarat State Petroleum Corp. Ltd to set up terminals at ports for importing LNG.
For ports, it is an opportunity to diversify the cargo mix as part of a de-risking strategy.
Many of India’s state-owned ports have seen petroleum, oil and lubricant (POL) cargo growth—once their mainstay with a share of 31% of overall cargo—stagnating even as the country’s crude oil imports grew year after year. This is because oil refiners erected so-called single-point mooring (SPM) in mid-sea where oil super tankers can come and unload the crude which is then taken to refineries through pipelines.
This is a cost-effective way of importing crude as oil super tankers—which cannot be accommodated at many Indian ports due to depth restrictions—allow economies of scale as larger quantities can be imported at a time, leading to savings in freight costs for importers.
Single-point mooring is a loading buoy anchored offshore that serves as a mooring point and interconnect for oil tankers loading or off-loading gas or liquid products. They are capable of handling any ship size, even very large crude carriers (oil supertankers).
LNG as a cargo provides stable business for ports for longer periods as it is not exposed to the policy and regulatory risks associated with other cargo such as iron ore. Since July 2011, India’s Supreme Court has imposed a ban on mining iron ore to check environmental damage arising from rampant illegal mining. Besides, there are restrictions on export of iron ore. This has drastically reduced iron-ore loadings at India’s ports.
Setting up LNG terminals is not subjected to the tortuous bidding process witnessed for cargo such as containers because the deals are finalized through negotiations between the port and the LNG importer.
It is worth noting that most of these LNG import terminals, with the exception of Ennore and Paradip, are proposed to be set up at ports outside the control of the Indian government. There are two main reasons for this. Ports that are owned by India’s states but are given to private firms for development and operations have the freedom to set rates for services provided, unlike those owned by the Indian government.
This holds true for Ennore also. It is the only port among the 13 owned by the Indian government that is run as a company, while the others are run as trusts. Ennore as such is outside the ambit of the tariff regulator for the Indian government ports that function as trusts.
Secondly, ports owned by the states have vast tracts of land to support activities surrounding the re-gasification of LNG.
Erecting an LNG terminal will cost as much as Rs.2,000 crore. Much of this money will be invested by the entity importing the fuel, with the port developers providing the basic infrastructure and taking small equity stakes in such ventures.
Understandably, ports are going all out to woo LNG importers to set up terminals that re-gasify LNG at their respective locations.
Source:- livemint.com
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