Petronet to build LNG plant in India's east coast by 2016

NEW DELHI Wed May 2, 2012 6:53pm IST

A worker walks inside the complex of Guru Gobind Singh oil refinery near Bhatinda in the northern Indian state of Punjab April 27, 2012. REUTERS/Ajay Verma

A worker walks inside the complex of Guru Gobind Singh oil refinery near Bhatinda in the northern Indian state of Punjab April 27, 2012.

Credit: Reuters/Ajay Verma

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NEW DELHI (Reuters) - Petronet LNG Ltd. (PLNG.NS) will invest 45 billion rupees to build a liquefied natural gas (LNG) terminal on India's east coast by 2016 to help meet the growing demand of the energy-hungry nation.

Companies are building LNG import and regasification facilities on the east coast to meet demand of eastern and central part of India as plants are now located only on the west coast.

Petronet, partly owned by GAIL (GAIL.NS), Indian Oil Corp (IOC.NS) and refiner Bharat Petroleum Corp (BPCL.NS), has signed an agreement with Gangavaram Port Ltd. to build the 5-million-tonne-a-year plant in southern Andhra Pradesh state, the gas importer said in a statement on Wednesday.

Problems at the D6 block, off India's east coast operated by Reliance Industries (RELI.NS), have curtailed domestic output while state-run Oil and Natural Gas Corp (ONGC) struggles to arrest declining production from its ageing field.

Asia's third-largest economy is scouting for long-term LNG contracts to help power electricity generation, fertiliser production, city gas distribution and industries.

Gas accounts for about 10 percent of India's primary energy basket versus the world average of 24 percent, and the country's gas demand is expected to grow at 14 percent in the next five years, P ri me Minister Manmohan Singh said in September.

India aims to increase its LNG handling capacity to 50 million tonnes a year by 2017 from 13.5 million tonnes now, Oil Minister Jaipal Reddy said in March.

Petronet buys 7.5 million tonnes of LNG under a long-term deal with Qatar at Dahej and has tied up 1.5 million tonnes of LNG annually from Australia's Gorgon project from 2014 for its Kochi plant.

India aims to double its LNG imports from Qatar and has sought 3 million tonnes of LNG for immediate requirement in the country.

Petronet operates a 10 million tonnes a year LNG terminal at Dahej in western Gujarat state and plans to commission a 5-million-tonne-a-year terminal by December on the west coast at Kochi, in southern Kerala state.

India has an LNG terminal on the west coast at Hazira in Gujarat, while commissioning of Dabhol LNG plant on the west coast is imminent.

Last month, French utility GDF Suez (GSZ.PA) signed a deal with Andhra Pradesh Gas Distribution Corporation for developing India's first floating LNG terminal.

State-run Indian Oil Corp (IOC.NS) is also building a 5 million tonnes per year LNG terminal at Ennore in southern India, which is expected to come online by 2014.

(Reporting by Nidhi Verma; editing by Malini Menon; editing by Malini Menon)

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