Al Manhal to invest $2 billion in Orissa LNG project

MUMBAI�The Abu-Dhabi based Al Manhal International Group said it will invest around $2 billion over the next 4 years in a project that involves setting up a liquefied natural gas terminal at the minor port of Gopalpur in the eastern Indian state of Orissa, and the laying of a 2,800-km pipeline system. The project was announced late last year (OGJ, Jan. 3, 2000, Newsletter).

�Our initial investment will be around $450 million, for setting up a five million tonne capacity LNG receiving and regasification terminal, jointly with Vavasi Oil [Pty. Ltd.] and Gas India Ltd.,� said Bruce M Gordon, energy consultant with Al Manhal.

The two partners, between them, would hold 50% of the equity in the company, which is to be named Gopalpur LNG Ltd.

A quarter of the shares would be offloaded in favor of Australia LNG, the LNG supplier to the project. The latter is a consortium of units of Royal Dutch/Shell Group, Chevron Corp., BP, BHP Petroleum Pty. Ltd., Woodside Petroleum Ltd., and the MiMi combine of Mitsui & Co. and Mitsubishi Corp.

A further 5% equity would be taken by Industrial Promotion & Investment Corp. of Orissa, and the remaining 20% stake would be offered to a strategic partner. It is understood that Al Manhal is in talks with India's state-owned Oil and Natural Gas Corp. about joining the project.

�Construction on the terminal will begin in the second half of 2001 and is expected to be completed by end-2003,� Gordon said. �The first LNG consignment will only arrive in early-2004.�

The 2,800-km long pipeline system for transportation of the LNG across the northern and southern parts of the country would involve an investment of $1.5 billion. Construction on it would begin by mid-2001.

The pipeline in the north would stretch 1,600 km to Auraiya in Uttar Pradesh, while the one in the south would extend 1,200 km to Cuddalore in Karnataka.

The sale-purchase agreement between Australia LNG and Gopalpur LNG is expected to be concluded by end-2000 and will involve supply of 5 million tonnes/year of LNG over 20 years, beginning in 2004.

�We would specially have three to four LNG tankers constructed for transporting the gas from the north-west shelf gas project in Australia to Gopalpur port,� said Gordon. �As per the LNG transportation policy of the country, we will induct an Indian partner for the LNG carriage.�

International engineering outfit MW Kellogg Brown & Root, a unit of Halliburton Co., is preparing a detailed feasibility report. Engineering, procurement, and construction (EPC) bids will be invited as soon as the report is ready.

Alongside the LNG terminal, Al Manhal has proposed a 2,500-Mw combined cycle power plant at an additional cost of $1.6 billion and a 1.21 million tonne natural gas-based urea-ammonia fertilizer complex at an estimated cost of $750 million, Gordon indicated.