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Shell's Hazira LNG terminal to miss commissioning deadline

Shirish Nadkarni
OGJ Correspondent

MUMBAI, Dec. 29 -- Contractor-generated delays have caused Royal Dutch/Shell Group subsidiary Hazira LNG Private Ltd. to miss commissioning the $680 million LNG receiving terminal at Hazira in Gujarat state by the yearend 2004 deadline.

Commissioning has been rescheduled for late February or March, a senior company official told Lloyd's List. Total SA recently acquired a 26% interest in this facility.

French firms Hazira Cryogenic Engineering and Hazira Marine Engineering will pay a penalty for the delay as stipulated in their contract with Shell, the official said, refusing to specify the penalty amount.

Shell said it would source the LNG from Oman, Qatar, Malaysia, or Nigeria for sale in India from first quarter 2005. "Expansion is under way at our Malaysia, Nigeria, and Oman natural gas liquefaction units," the official said.

Shell also plans to increase the Hazira terminal's capacity to 10 million tonnes/year (t/y) from 5 million t/y—originally 2.5 million t/y—because of India's huge natural gas demand (OGJ Online, Oct. 20, 2004). Space has been provided at the Hazira terminal for two additional LNG storage tanks of 2.5 million tonnes each.

Two LNG vessels, collectively valued at $400 million, likely will be brought in from West Asia. According to the project plan, Shell subsidiary Hazira Port Private Ltd. will set up the private multicargo port at a cost of $200 million.

The import terminal and the 17-km pipeline that connects it to the gas grid of Gujarat state firm Petronet LNG Ltd. are to be completed by yearend at a cost of $320 million.

The first ship carrying imported LNG to Hazira is scheduled to unload its consignment in first quarter 2005, and deliveries are to become regular by June.

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