For the first time in India,Indian Oil Corp., the country’s largest refiner, plans to transport one million tonne per annum (mtpa) of liquefied natural gas (LNG) in cryogenic containers by road to its customers as it seeks to expand its customer base.
The initiative will help the company in supplying LNG even to those units that are not located near the major gas pipeline grids in the country.
Alternative routes: The new approach would help IOC reduce its dependence on gas pipelines, and cater directly to its customers.
LNG, once gasified, is generally transported through pipelines operating at high pressure. By adopting this approach, IOC would reduce its dependence on gas pipelines and at the same time, directly cater to its customers who are primarily units in the power and the fertilizer sector.
“We plan to go in a big way (with) using this approach as it will provide us with more customers,” said B.M. Bansal, director, planning and business development, IOC.
IOC has a unit called the cryogenic group that has developed cryogenic containers, which help keep the gas inthe liquefied form till it rea-ches the customers. This is done by maintaining the temperature at minus 150 degrees Celsius.
“The initiative titled ‘LNG at the doorstep’ has been launched as a pilot project in Maharashtra and Gujarat, and we now (have) plans to take this scheme countrywide,” Bansal added.
But not everyone sees the need for such transport of gas. “Such a move makes sense when you need to deliver gas to remote hamlets where the demand is low and laying down a pipeline is uneconomical. The only place I have seen this succeed is in Japan. In India, (where) there is an acute shortage of gas and everything gets absorbed quickly, I do not see the need for this additional marketing tool,” said Ajit Kapadia, vice-chairman of the Centre for Fuel Studies and Research, a Vadodara-based think tank.
With natural gas supplies unable to fulfil the demand in the country, power generation and fertilizer units are increasing using LNG as fuel.
A case in point is the power sector where gas-based capacity accounts for around 10%, or 13,691MW, of India’s total power generation capacity of 135,000MW. Of the 78,577MW that the country aims to add by 2012, some 5.45%, or 4,290MW, of gas-based capacity has been planned.
While most Indian companies are yet to tie up long-term gas supplies, they have been buying LNG in the spot markets, where prices are around $18 (Rs709) per million British thermal units, to meet the demand shortfall.
The petroleum ministry estimates India will need around 180 million standard cubic metre per day (mscmd) of gas in 2007-08. It expects supply to be around 81mscmd.
India imports around 2mtpa of gas, bought in the spot markets. This is primarily sourced by Shell India Pvt. Ltd and Petronet LNG Ltd. The balance comes from local production and long-term supply contracts with overseas sellers. IOC, which has a stake in Petronet LNG, plans to import 2mtpa of LNG in 2007-08.
Udit Misra contributed to this story.