November 9, 2017 / 11:37 AM / 14 days ago

Petronet LNG turns focus to poorly supplied east coast

NEW DELHI/MUMBAI (Reuters) - India’s biggest gas importer Petronet LNG Ltd wants to build up its liquefied natural gas (LNG) regassification capacity in the east of the country where supply is limited, after focussing till now on the west, the CEO said on Thursday.

Natural gas accounts for about 6.5 percent of India’s overall energy needs, far lower than the global average. The government wants to lift it to 15 percent in next few years.

India has four LNG terminals to import gas, but all of them are in the west. They have combined annual capacity of about 22 million tonnes. The Indian Oil Corp’s Ennore terminal, the first on the east coast, will become operational next year.

Petronet wants at least a 25 percent stake in the Ennore terminal, Managing Director and CEO Prabhat Singh said.

“Having something on the east is looking good because you have so many terminals coming on the west,” he told a news conference, adding Ennore “looks attractive to us immediately.”

The Oil Ministry approved a plan in 2016 to fund 40 percent of a 2,500-km (1,500-mile) gas pipeline costing 129.4 billion rupees ($1.99 billion) to connect five poorly served eastern states of India in a bid to encourage gas usage.

Singh said it would cost less to source gas from east coast terminals, which are closer to international suppliers, than piping the fuel across country from the west coast.

He put the saving at about $1 per million British thermal units (mmBtu), 13 percent less than the LNG price on the west coast.

India’s economic development has concentrated in western and southern states, where infrastructure is better and energy supplies more accessible through a network of pipelines.

The eastern region has many small-scale industries and several gas-fired power plants are shut because a lack of cheap gas supplies in the region make running costs too high.

Petronet is planning to expand its Dahej LNG terminal in the western city state of Gujarat to handle 17.5 million tonnes per annum (mtpa) by July 2019 from 10 mtpa. It also operates a 5 mtpa LNG terminal at Kochi in the southern state of Kerala.

($1 = 64.9750 Indian rupees)

Reporting by Nidhi Verma; Editing by Edmund Blair

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