New Delhi: Reliance Industries Ltd is mulling the establishment of a $1.2 billion liquefied natural gas (LNG) import terminal on either the East or West Coast to meet demand at its refineries and petrochemical plants.
“Reliance needs 14 million standard cubic metres per day (mmscmd) of gas at its twin refineries at Jamnagar, in Gujarat. Besides, it needs gas at its petrochemical plants,” a source said.
The company had contemplated setting up the liquefied natural gas (LNG) import terminal as early as 1997. However, it later shelved plans for a 5 million tonnes per annum port terminal at Jamnagar for receipt of LNG transported from overseas via cryogenic ships and a plant for re-gasification of the liquid cargo.
The compelling reason for Reliance to re-evaluate the prospects for a LNG terminal was its inability to use the natural gas it produces from the eastern offshore KG-D6 field, as its twin refineries at Jamnagar have been allocated just 2.34 mmscmd out of the 60 mmscmd of gas that the government has earmarked for various users.
Reliance, the source said, is buying one LNG cargo a month from Royal Dutch Shell at prices that are in double digits, as against a delivered price of $7 per million British thermal units of KG-D6 gas.
A company spokesperson was not available for comments.
“Jamnagar is the natural choice, but Gujarat already has two LNG terminals at Dahej (operated by Petronet LNG) and Hazira (owned by Shell India and Total of France). A third terminal is under planning stage at Mundra (by Adani Group and Gujarat government entity GSPC) and so a fourth one in the state looks unlikely,” the source said.
One of the options is to set it up at Kakinada, in Andhra Pradesh, following which the under-utilised East-West pipeline - which connects the landfall point for gas from the eastern offshore KG-D6 field to Baruch in Gujarat - can be used to move the fuel to the company’s plant.
The pipeline can move up to 100 mmscmd of gas, but only half of its capacity is currently being utilised on account of production constraints at KG-D6 field, which produces 54 mmscmd at present.
RIL is also considering the option of using a floating LNG facility that will receive cryogenic ships at high sea and regasify the liquid cargo into natural gas before piping it to shore through a submarine pipeline. “The floating LNG terminal will take one-and-half years, compared to 36-40 months for a proper LNG terminal,” he said.
Sources said Reliance had also explored the possibility of picking up a stake in Adani’s proposed LNG terminal at Mundra, but the talks did not go anywhere as the two sides could not agree on capacity sharing.
Reliance had in 2000 tied up LNG imports from Iran, but later shelved the plan after it discovered huge gas reserves off the Andhra coast.