By Shirish Nadkarni
OGJ Correspondent
MUMBAI, July 28 -- Petronet LNG, the Indian government-owned gas pipeline company, plans to double the capacity of its LNG receiving terminal at Dahej, on the Gujarat coast, to 10 million tonnes/year from 5 million tonnes/year.
"We are exploring this option in view of the expected rise in demand for LNG in the country," said S.C. Mathur, Petronet's chairman and managing director. He said work was nearing completion on the 5 million tonnes/year Dahej terminal, and would require "minimal additional investments to expand its capacity."
In Phase II, Petronet also would construct a 2.5 million tonnes/year LNG terminal at Kochi, in Kerala.
Although massive gas finds by Reliance Industries in the Krishna-Godavari basin in Andhra Pradesh last October seemed to reduce the need to import LNG, Petronet is counting on the National Thermal Power Corp. buying 3 million tonnes/year of LNG.
Petronet also is negotiating a reduction in the price of LNG from its supplier RasGas of Qatar.
"RasGas has indicated its willingness to negotiate on the price of LNG, but it wants a similar gesture from the Indian side, of committing to buy greater quantities," said Mathur.
The Indian firm is understood to have already reduced its rate of return on investment, cut costs on the Dahej building infrastructure and regasification terminal, and negotiated more-favorable transportation costs from shippers.
Another factor in the expansion decision is that, in its 2003-04 budget, India's Finance minister had reduced customs duty on the import of regasification plant and machinery to 5% from 25%