A consortium led by Bharat Petroleum Corp Ltd (BPCL) has scrapped plans to build a US$770 million LNG import terminal at Mangalore in the southern Indian state of Karnataka.
Bharat and its partners in the project - exploration and production major ONGC and Japan’s Mitsui & Co - had intended to construct a facility capable of receiving up to 3 million tonnes per annum (mta) of LNG, expandable at a later stage to 5 mta.
However, the developers have now shelved the scheme, citing weak demand and inadequate distribution infrastructure in the immediate region as well as the poor utilisation rate of a similar LNG import terminal in Kochi, 365km south of the port of Mangalore.
Petronet LNG Ltd (PLL) commissioned the 5 mta Kochi terminal in 2013 but the facility has not been utilised at anything above 10 per cent of its rated capacity. The current usage rate is put at 2 per cent.
The Kochi terminal’s future depends on the construction of a pipeline network that will distribute regasified cargoes to major industrial and fertiliser customers throughout the states of Kerala, Tamil Nadu and Karnataka. To date Gail India Ltd, a gas distribution and logistics company with a minority equity stake in PLL, has been able to build only 40km of the planned 900km pipeline network due to landowner right of way objections on the planned route.
In cancelling the Mangalore project, BPCL points out that, given the experience and performance of the Kochi terminal, serious doubts have arisen over the development of another new terminal in the same economic hinterland.
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