Indian government split on LNG policy

NEW DELHI�After more than a year of inter-ministerial discussions and meetings by the Committee of Secretaries (CoS), major differences have arisen about the role of fiscal concessions for LNG import facilities.

Now India's cabinet has directed the petroleum ministry to draft a proposal for an integrated LNG policy.

CoS, which is comprised of bureaucrats drawn from the petroleum, power, surface transport, and finance ministries, was divided on whether more LNG projects should be encouraged.

Observers said a proposed government policy proposed that the Foreign Investment Promotion Board stop approving new LNG proposals and examine the feasibility of existing projects. Some CoS members argued that limiting the number of players would end up increasing costs.

Also, the power ministry argued LNG imports should be on cost-insurance-freight (cif) basis but the surface transport ministry favored a freight-on-board basis, which it said would encourage Indian shippers and construction of domestic capacity.

And the finance ministry was considering several fiscal incentives for the LNG industry, which has high tariffs.

French project
Meanwhile, Gaz de France (GdF) is working on a $2 billion, 5 million tonne/year LNG project in India.

A gasification terminal at Dahej on the northeast coast of Gujarat state would receive the LNG from Qatar, for which Rasgas, a joint venture of Qatar Gas and ExxonMobil Corp.

The Dahej investment includes two 160,000 cu m tanks and two 142,000 cu m tankers. The terminal will cost $700 million and related gas lines $100 million.

Gaz de France was chosen as "strategic partner" for operator Gujarat State Petronet Ltd. Owners of the latter were Oil and Natural Gas Corp., India Oil Corp., Gas Authority of India Ltd. (GAIL), and Bharat Petroleum Corp. Ltd.

GdF was negotiating for a 10% interest in Petronet.

The french firm will be co-operator of the methane carrier terminal. It will act as adviser for the selection of a shipping owner and operator of the two methane carriers to be built.

GdF has completed design of the LNG terminal through its subsiduary Sofregaz, and it will select the contractors and supervise construction.

The gas will be carried through a pipeline between the offshore Bombay High field and New Delhi. GAIL will build an extension to Dahej. National Thermal Power Corp. will take 40% of the gas.

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