Japan's Sumitomo Corp. and Marubeni Corp. have joined with BG plc in its venture to establish India's first terminal for liquefied natural gas at the private port of Pipavav in Gujarat.
BG, formerly British Gas plc, has a memorandum of understanding (MOU) with Gujarat Pipavav Port Ltd. (GPPL), a private company that will set up the entire port infrastructure at Pipavav (OGJ, July 14, 1997, p. 33).
The investment envisioned for the first 6 years is $900 million. The project is expected to be completed within 45 months from Aug. 1, 1997.
It isn't clear at this point what roles the Japanese companies will play in the venture, but financing is a likelihood.
Project details
The dedicated LNG terminal will have a capacity of 2.5 million metric tons/year and is expected to be expanded later to 5 million tons/year.
Under the MOU, GPPL will lease BG 150 acres of existing port land, for which BG will pay the company a royalty for each ton of LNG received for the next 25 years.
The royalty has been fixed on the basis of a throughput guarantee of 2.2 million tons/year of LNG in the first 5 years. From the sixth to the 25th year, BG will have to guarantee a throughput of 4.8 million tons/year.
GPPL will provide BG with all the backup infrastructure, which includes road, rail, power, and waterfront facilities. The port will have the capability of berthing LNG carriers up to a cargo capacity of 135,000 cu m of LNG.
Import facilities will consist of berthing and offloading facilities for the tankers, storage tanks, and regasification facilities. The LNG would come from BG gas fields in Qatar, Kazakhstan, Russia, and Trinidad and Tobago.
BG chose Pipavav after carrying out a detailed, 18-month feasibility study of the port. The study also focused on potential power projects in the state of Gujarat and northern India.
Shipping plans
Meanwhile, BG has simultaneously been talking to the government-owned Shipping Corp. of India (SCI) and the Great Eastern Shipping Co. (Gesco), the country's largest private-sector shipping outfit, to move LNG from its gas fields to Pipavav.
This would be in line with the recently announced draft national shipping policy, which makes it mandatory for foreign companies to move LNG with the assistance of Indian flag ships.
Of immediate concern to BG is the 615-MW power project in Gujarat, for which the British company has bid, along with other partners.
Tying up long-term credit-worthy customers for LNG from Pipavav will be the main task before BG.
The British multinational has also proposed a $300 million pipeline project from Pipavav to the northern and central regions of India to transport the regasified LNG.
This will include a subsea pipeline from Pipavav to Hazira, which is a major production center for several top industrial groups, including Reliance Industries and Essar Steel.
This project is in addition to projects disclosed in collaboration with the Gas Authority of India Ltd. and Gujarat Gas (OGJ, July 28, 1997, p. 42).
Copyright 1997 Oil & Gas Journal. All Rights Reserved.
