A new LNG import terminal in southeast India will help meet the country’s growing natural gas usage with the support of an FSU
Plans by the Indian government to grow the use of natural gas by 150% in the country’s energy mix by 2030 will require the construction of new LNG terminal capacity. Already the world’s fourth largest importer of LNG behind Japan, China and South Korea, India has five terminals in operation, with 11 others either under construction, in development, or proposed.
In February, downstream gas and LNG logistics company Atlantic Gulf and Pacific (AG&P) broke ground on a new LNG import terminal at Karaikal Port, a deepwater port about 280 km south of Chennai on India’s east coast.
With a target opening of Q4 2021, Karaikal LNG import facility will be owned and operated by AG&P, with an initial capacity of 1 mta, with the possibility of doubling capacity. In close proximity to Tamil Nadu’s thriving manufacturing clusters, the new LNG import terminal will provide natural gas to power plants, industrial and commercial customers within a 300 km radius. The region is home to a wide range of industries including agriculture, textiles, steel, cement and manufactured goods, power plants and other processing factories.
Karaikal LNG will serve AG&P’s city gas networks and other city gas companies that bring compressed natural gas (CNG) and LNG to vehicles and piped natural gas (PNG) to households and businesses. Using truck loading bays at the terminal, AG&P will use its own fleet of tanker trucks to deliver LNG to remote customers.
AG&P president, LNG terminals and logistics Karthik Sathyamoorthy tells LNG Shipping & Terminals that the Karaikal LNG import facility is part of the US$1.3Bn capital investment that AG&P is making in India’s gas and LNG infrastructure over the next eight years. Roughly 70% of this is funded by traditional project financing, with a mix of Indian and international lenders. About US$1.2Bn of the capex will go towards the development of AG&P’s city gas distribution (CGD) networks in Rajasthan, Andhra Pradesh, Tamil Nadu, Karnataka and Kerala. In these populous and industrialised states, AG&P has been awarded exclusive licenses by the Indian government to establish CGD networks in 28 districts in 12 geographic areas. Together, these networks will cover roughly 8% of India’s land area, according to Mr Sathyamoorthy.
India’s Petroleum & Natural Gas Regulatory Board (PNGRB) awarded these licenses to AG&P during the 9th and 10th rounds of bidding in 2018 and 2019, respectively.
To expand access of natural gas to gas-powered vehicle owners, AG&P will build more than 1,500 compressed natural gas (CNG) stations. “We will also lay 17,000 km of steel pipelines to build PNG connections to households, factories and commercial businesses such as hotels and shopping malls,” says Mr Sathyamoorthy.
2019-Present: president, AG&P LNG Terminals & Logistics
2017-Present: president, AG&P LNG Marketing
2017-Present: non-executive director, Genesis Ray Energy
2017-Present: non-executive chairman, BrainGroom
2016-2017: president, Galway Group
2014-2015: managing director, Galway Group
Four years with Wood Mackenzie covering the gas and power markets in Asia Pacific, Australasia and Middle East.
LNG import terminal development
To develop the Karaikal LNG terminal, AG&P is utilising a floating storage unit (FSU) and modular ‘plug-and-play’ regasification technology deployed onshore. This technology, called a Regastainer, was developed by GAS Entec to simplify start up. The Regastainer incorporates the LNG booster pump, regasification vaporiser, suction drum, glycol heating system, boil-off gas handling system and metering system in a customised module.
As for the FSU, AG&P signed a 15-year agreement with ADNOC Logistics and Services for the charter of the LNG carrier Al Khaznah starting in 2021. The Karaikal LNG import terminal will be the fourth using an FSU, after those of Malta, Malaysia, and Bahrain.
Built in Japan in 1994, Al Khaznah has five IMO Type B cargo containment tanks with a total capacity of 137,540 m3. Currently under contract to ADNOC LNG, Al Khaznah is one of eight LNG vessels operated by ADNOC L&S.
“From a cost perspective, this model reduces upfront capex and minimises the need for costly onshore infrastructure or FSRU solutions,” says Mr Sathyamoorthy. He adds, “From a supply-demand perspective, the arrangement offers a flexible solution that can easily meet smaller market demand initially, but can be scaled up as demand increases.”
The Karaikal LNG import facility will have an initial capacity of 1 mta, which will be expanded to 2 mta in the medium term. India’s total demand for natural gas is expected to grow by 150% over the next 10 years, from 167 million cubic metres per day (mcmd) to 420 mcmd by 2030.
The demand is being driven by the Indian government’s objective of increasing natural gas from 6% to 15% of the country’s total energy mix and making natural gas more widely available for day-to-day consumption through CGD networks.
Beyond India, AG&P is actively working on import terminal projects in southeast Asia and the Caribbean, the details of which are commercial-in-confidence, says Mr Sathyamorthy.
“Our goal is to make LNG more accessible and affordable for downstream customers in emerging markets that are currently outside the reach of existing infrastructure,” he says. “We are doing this by developing low-cost terminals with efficient, modular onshore infrastructure that can be built quickly. This reduces upfront expenditure and lowers the delivered cost of LNG for the customer, making it viable for them to switch to natural gas as their principle fuel source.”