Hindustan Petroleum Corp. Ltd (HPCL), one of India’s leading oil-retail companies, has suspended its plans of setting up the Rs2,600 crore liquefied natural gas (LNG) terminal at Mundra, Gujarat, on account of limited availability of gas for import.
The decision is a setback to the company’s gas distribution plan and puts it at a disadvantage compared with its rivals; most of them have secured steady gas supply and access to an LNG terminal by taking a strategic stake inPetronet LNG.
HPCL proposed to build a five million tonne per annum (mtpa) LNG terminal as part of its plan to enter the business of gas distribution. But its plans to source natural gas from overseas, especially West Asian countries, have not yielded results as yet.
“As of now, the greenfield facility plans have been put on hold as we have not been able to secure gas supplies,” said a senior company executive who did not wish to be identified .
HPCL had completed the detailed feasibility study for the regasification terminal which would have called for an investment of Rs2,600 crore. Re-gasification is the process of converting LNG—transported in the liquid form—back into the gaseous state.
HPCL has an annual turnover of over Rs74,044 crore and a 20% share in the oil refining and marketingsector.
Industry analysts who did not wish to be quoted said any delay in HPCL’s terminal would impact its plans of becoming an integrated player across the hydrocarbon value chain. “In such a situation, there is a strong possibility of HPCL losing some of its customers to competitors such as GAIL India Ltd, Indian Oil Corp. (IOC) and Bharat Petroleum Corp. Ltd (BPCL) which already have a secured supply of gas and a facility to regasify it,” said one analyst.
GAIL, IOC, BPCL and Oil and Natural Gas Corp. have stakes in Petronet LNG.
India has only two LNG re-gasification terminals. Both are located in Gujarat. One is owned by Petronet LNG (capacity of five mtpa) and the other by Shell India (2.5 mtpa). Other terminals in the pipeline include one attached to the Dabhol project (five mmtpa), and one each in Kochi (five mtpa) and Mangalore (1.25 mtpa).
HPCL had the option of either building a new terminal or taking a stake in Shell’s.