By the OGJ Online Staff
LONDON, Jan. 28 -- BP PLC and two partners have revived plans to invest $1 billion in a liquefied natural gas import terminal and power station in the eastern Indian state of Andhra Pradesh. Completion would be expected by 2007.
The project has been delayed for 2 years following an Indian government study that concluded power plants utilizing the imported gas would not be operational until 2007.
The other partners in the project are Indian Oil Corp., the country's biggest refiner, and the Malaysian state oil company Petronas. The partners hold equal stakes in the project (OGJ Online, July 26, 2000).
The project is one of more than 20 originally proposed to meet a predicted upsurge in gas demand for power generation and domestic use. Most of those import projects have been abandoned because of lack of funds to develop the associated infrastructure and the Andhra Pradesh project is one of only nine still being planned. The terminal would handle 2.5 million tonnes/year, 1.5 million for an associated new power station and the rest going to local companies. Supply contracts have yet to be negotiated.
India is trying to raise natural gas's share of the energy supply to 20% by 2025 from 8% in 2000. The government has predicted that India's gas supply deficit will increase fivefold by 2012 to 218 million cu m/d. The nine remaining projects could meet 56% of the shortfall.
Royal Dutch/Shell Group and Petronet LNG Ltd., a local Indian company, plan to complete two of the nine LNG import terminals by 2004. BG Group PLC plans to build another of the terminals for completion in 2005, but will start construction only if it can sign up customers after India removes a price cap on natural gas and equalizes sales taxes across all Indian states.
The country has become a less attractive market for foreign investment, and at least five foreign companies have withdrawn from gas-fired generation projects because of the slow progress of market reforms.
AES Corp. of the US will give its 51% of an Indian power distributor in Orissa to the company's employees. The operating company of the power station, Central Electricity Supply Co., 49% owned by the state government, is owed $85 million because of power thefts and unpaid bills.
Another US company, Mirant Corp., said late last year that it quit two Indian coal-fired power projects, including one worth $4.5 billion that was India's largest, because local regulations don't protect investors adequately. Electricite de France and Cogentrix Energy Inc. have also exited Indian LNG power projects.
Enron Corp. put its 740-Mw power plant at Dabhol up for sale because of a payment dispute with the Maharashtra State Electricity Board, its sole customer. The company also halted a $2 billion expansion in June that was to convert the oil-fired power station to LNG and triple its output to 2,184 Mw. Enron's original plan also included construction of a 5.5 million tonne/year import terminal.