India`s plans to create a gas pipeline supply grid are gathering momentum as the result of an announcement by Gas Authority of India Ltd. (GAIL).
Following a similar declaration by Houston`s Enron Corp., GAIL has said it will lay a gas pipeline from a proposed LNG terminal on India`s West Coast to inland markets.
Simultaneously, Petronet India Ltd., parent of India`s state-owned LNG import group, Petronet LNG, has revealed it is close to reaching a deal with Qatar`s Ras Laffan LNG Co. (Rasgas) regarding LNG imports to two terminals it plans to build in western India. It is one of these terminals that would supply GAIL`s proposed gas pipeline.
Meanwhile, a consortium related to the Dabhol Power Co., in which Enron has a lead role, has received approval from the Reserve Bank of India (RBI) to build a new LNG carrier for imports from Qatar and Oman.
New gas pipeline
GAIL plans to lay a 550-km natural gas pipeline in India`s Gujarat state from an LNG terminal Petronet LNG is planning to build at Dahej, Gujarat. The pipeline would be parallel to the Hazira-Bijapur-Jagdishpur (HBJ) pipeline and would have an estimated cost of 15 billion rupees (about $350 million).
The 20 million cu m/day gas pipe- line is likely to be completed by 2003. The proposed line would compete with a similar proposal put forward recently by Enron (OGJ, June 21, 1999, Newsletter).
Petronet LNG, a consortium of four Indian petroleum companies, was created by the Indian government to set up LNG import facilities for meeting the requirements of the power and fertilizer sectors, among other potential users. GAIL, which has a 12.5% stake in Petronet LNG, already has the right of way to lay the pipeline in Gujarat and is conducting preliminary studies on the proposed line.
Petronet LNG`s Dahej terminal would have capacity to import 5 million metric tons/year of LNG. The firm is planning to finish the terminal by March 2003 to coincide with start-up of GAIL`s planned gas pipeline.
Petronet India Ltd., is close to inking a final agreement with Rasgas for the supply of 7.5 million tons/year of LNG.
In addition to the 5 million tons/year of Qatari LNG that would be imported to Petronet LNG`s Dahej terminal, another 2.5 million tons/year would be shipped to Petronet LNG`s proposed terminal at Kochi (formerly Cochin).
"We are very close to the deal. It will be finalized very shortly," said Mohammed Asa Pathan, chairman of Petronet India.
"We are going to import LNG for the first time into India, and we need to examine all aspects before agreeing to a sales and purchase agreement," he said, adding: "We have to take steps to protect our interests."
Petronet is likely to seek an fob-type deal, with a shipping company being formed in India to transport the Qatari LNG to the two planned terminals.
Meanwhile, RBI has given its approval for acquisition of a new LNG carrier by a group comprising Shipping Corp. of India, Mitsui-OSK Lines, and Enron India. The vessel would transport LNG from Qatar to the Enron-led power project at Dabhol (OGJ, June 14, 1999, p. 34).
Mitsui has a 60% equity stake in the shipping joint venture, while the other two partners have 20% each. The JV will be responsible for acquiring and operating the new vessel, to be called LNG Lakshmi.