India is poised to add a new tranche of LNG import terminals to its established quartet of facilities. The newcomers will start slow but grow big
India is the world’s fourth-largest LNG importer. While the 19.22M tonnes purchased in 2017 was only 1.3% ahead of the previous year’s total, import volumes in 2018 are once again growing strongly.
Imports for April-July 2018 reached 7.46M tonnes, a 20.3% jump on the same period a year earlier. Utilisation rates at Dahej, the largest of the country’s four import terminals with a capacity of 15M tonnes per annum of LNG, have been running at over 100% throughout this year.
India’s four receiving terminals, which are all located on the country’s west coast, are established facilities. The newest of the quartet, Kochi, was commissioned in August 2013.
The existing network is about to be joined by at least half a dozen new import terminals over the next few years, three of which are set to be operational before the end of 2018.
LNG for Mundra port
The 5-mta Mundra terminal, Gujarat’s third LNG receiving facility, is expected to receive its first cargo within the next few weeks. The shipment to the new import complex, on the north side of the Gulf of Kutch, is to be supplied by Shell at the end of this month.
Gujarat State Petroleum Corp (GSPC) owns a 75% stake in the project and the private Adani Group 25%. GSPC has expressed interest in selling at least a 25% stake in the new scheme, and possibly up to 50%. Indian Oil Corp (IOC) intends to acquire a minimum 25% share but has yet to finalise any agreement.
Although holding only a minority stake in the initiative, Adani played a key role in launching the Mundra LNG scheme. Adani Ports and Special Economic Zone (APSEZ), the group’s specialist port infrastructure developer, has built Mundra into one of the country’s leading ports over the past decade.
Mundra is the only private commercial port in India to have handled over 100 mta, a milestone passed in recent years. On top of the new LNG terminal and the facilities for handling just about every other conceivable type of cargo, Mundra is also set to commission a new LPG import terminal before the year is out. It will have capacity to handle 1.35 mta.
The Mundra LNG project partners have yet to line up any long-term sale and purchase agreements to guarantee take-up of the facility’s regasification capacity. The facility is expected to operate at a utilisation rate not exceeding 30% for at least 18 months, while the final connections to the country’s northwestern gas grid are completed and baseload customers are signed up to augment spot cargoes.
Ennore – an east coast breakthrough
While IOC weighs up its options regarding involvement with Mundra LNG, the opening of its own new LNG receiving facility at Ennore in Tamil Nadu state is imminent. Another 5-mta terminal, Ennore is also scheduled for a Q4 2018 start and will be the first LNG receiving terminal on India’s east coast.
As is the case with Mundra LNG, up to 50% of the shareholding in the project is on offer to one or more strategic partners, such as an LNG supplier. This share of the equity is currently held by two Indian development banks anxious to divest their interests. In the meantime, IOC controls 45% of shares in the project while TIDCO, a Tamil Nadu government enterprise, holds 5%.
Ennore is unlikely to operate at anything near full capacity for at least a year, and possibly two. Like Mundra, Ennore does not yet have any long-term LNG purchase contracts in place to ensure steady employment for Ennore’s regasification capacity. The terminal will depend on spot cargoes initially.
IOC is also involved with another Indian east coast LNG scheme and, as is the case with Mundra, Gautam Adani’s Adani Group is the project leader. APSEZ plans to build a 5-mta LNG import terminal at Dhamra in Odisha state and has signed an agreement with IOC to provide 3 mta worth of regasification services on a use or pay basis over 20 years. The state-run refiner plans to supply the gas to its refineries at Paradip in Odisha and Haldia in West Bengal.
The state gas utility GAIL India Ltd has also agreed to use Dhamra’s regasification capabilities on a similar use or pay basis, for 1.5 mta over 20 years. The Dhamra terminal is under construction and is scheduled to commence operations in the second half of 2021.
H-Energy terminal pair
Like the Adani Group, H-Energy has also set out to develop west and east coast LNG receiving terminals for India. And, as is the case with the Adani initiatives, the start-up of H-Energy’s west coast terminal, at the port of Jaigarh in Maharashtra state, is imminent while the east coast project is a few years away from the start of commercial operations.
A unit of the Hiranandani real estate group, H-Energy is using the 145,000-m3 floating storage and regasification unit (FSRU) GDF Suez Cape Ann to realise its Jaigarh scheme. The Höegh LNG-owned vessel is currently serving on a long-term charter with Total and is being sublet to H-Energy for five years.
2010-built GDF Suez Cape Ann has the capacity to regasify up to 3.7 mta. The ship made a familiarisation visit to its Jaigarh jetty in May and is now at a Singapore repair yard for final modification work prior to the start of operations later this year.
In January 2018 H-Energy signed an LNG sale and purchase agreement with Petronas of Malaysia. Details of the contract, including the supply volume and duration, have yet to be revealed. H-Energy expects to process around 2 mta of LNG at Jaigarh in the initial stages of the project but has stated that, if demand grows sufficiently in the years ahead, it will build a shore-based receiving terminal in the port with double the LNG-processing capacity of the FSRU.
As part of its initiative H-Energy will build a 635-km coastal pipeline, in stages, to open up new gas markets on India’s west coast. The first stage features a 60-km tie-in pipeline that Engineers India is constructing to the nearby port of Dabhol where there is a large gas-fired power station and a shore-based LNG receiving terminal.
H-Energy’s planned east coast terminal, for an offshore location near Digha in West Bengal, would also use an FSRU, although the final arrangement for the facility is still under review. A Q3 2020 start date has been targeted for the Digha terminal. H-Energy has agreed to form a joint venture with K Line of Japan to provide the required regas vessel.
H-Energy has made progress with securing an anchor customer for its Digha LNG venture, signing a heads of agreement with North West Power Generation Co Ltd (NWPGCL), a Bangladesh Power Development Board-owned utility, for 1 mta of LNG offtake. LNG throughputs at Digha of about 3 mta by 2025 are envisaged.
H-Energy has chosen FSRUs to realise its LNG import ambitions for India, as it is a solution which enables the company to start operations on a relatively small scale and to build incrementally as new markets open up.
The Swan floater
Another supporter of the FSRU approach is Swan LNG. The company is having a 5-mta, 180,000-m3 FSRU built at Hyundai Heavy Industries and on completion it will be stationed at a purpose-built jetty at Jafrabad to become Gujarat’s fourth LNG terminal.
Commercial operations are expected to start early in 2020. Mitsui OSK Lines has acquired an 11% stake in the Swan LNG scheme and will operate not only the FSRU but also an existing LNG carrier that has been modified for use at the terminal as a floating storage unit.
Swan LNG has already booked 60% of the FSRU’s regas capacity. IOC and two other state-owned oil companies – Oil and Natural Gas Corp and Bharat Petroleum Corp – each plan to import 1 mta of their own LNG and pay Swan a tolling fee for processing it.