IOC-led consortium bags Andhra Pradesh LNG project

A consortium led by Indian Oil Corp. (IOC) that includes Petronas of Malaysia has been tapped by the Andhra Pradesh state government to establish a hydrocarbon terminal�inclusive of a facility for liquefied natural gas�at Kakinada on India�s eastern coast.

MUMBAI�A consortium led by Indian Oil Corp. (IOC) and including Petronas of Malaysia has been tapped by the Andhra Pradesh state government to establish a hydrocarbon terminal�including an LNG import facility�at Kakinada on India�s eastern coast. The group beat four other consortia vying for the project, including one led by Royal Dutch/Shell Group.

Thus far, there has not been any large LNG facility planned for India�s East Coast, although state-owned Petronet LNG is planning to build terminals at Dahej and Cochin in, respectively, Gujarat and Kerala states on the West Coast.

The IOC-led consortium's proposal for Kakinada involved a total investment of 61 billion rupees in the first phase and 130 billion rupees in subsequent phases. The group has been asked to prepare a detailed project plan within 6 months and achieve financial closure within 12 months from the date of receipt of a letter of support or signing of a memorandum of understanding. Once the report is completed and statutory clearances are obtained from the government, the project is expected to take 36-42 month.

The state government has made it amply clear that the letter of support would not constitute any financial commitment on its part, and that, if the project report is not ready within 6 months, it will be at liberty to invite the Shell-led consortium to work on the project.

The project is a potential gold mine, as demand for natural gas is expected to grow in leaps and bounds, given the large number of industrial and power consumers along the Andhra Pradesh coastline.

In other Indian LNG news, BG PLC, a promoter of the 2.5 million tonne Pipavav LNG project in Gujarat, has approached the Indian government to facilitate the equity participation of Gas Authority of India Ltd. (GAIL) in the venture. The multinational has approached GAIL, as well as the petroleum ministry, saying that it is willing to give GAIL equity in the $300 million project.

The idea has yet to be approved by the GAIL board. GAIL may be hesitant because it already has a 10% equity stake in Petronet LNG's joint venture for a 5 million tonne terminal to be built at Dahej, only a few kilometers away from Pipavav.

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