India’s largest power generation company NTPC Ltd is looking at acquiring or setting up LNG (liquefied natural gas) terminals after the government decided against hiving off the under-construction LNG terminal of the Ratnagiri Gas and Power Project Ltd (RGPPL) at Dabhol, Maharashtra that the company was looking to acquire.
NTPC wants an LNG terminal to ship in around 3 million tonnes of natural gas per annum from Nigeria to power its plants here.
India faces a significant shortage of natural gas.
Under utilized: An NTPC plant at Gandhar in Gujarat. The company has seven plants fuelled by gas or liquid fuel. Some of them are currently operating at lower levels of efficiency because of shortage of gas.
“We are open to the idea of terminal acquisitions or even building it (a terminal) from scratch and are exploring options for the same,” T. Sankaralingam, chairman and managing director, NTPC, said.
The amount of investment would depend upon the size of the regasification terminal. LNG is transported in liquid form by ship and needs to be converted into gas (regasification) before it is used.
India has only two LNG regasification terminals. Both are located in Gujarat; one is owned by Petronet LNG Ltd (capacity of 6.5 million tonnes per annum, or mtpa) and the other by Shell India Pvt. Ltd (2.5mtpa). Other terminals in the works include one each in Dabhol (5mtpa), Kochi (5mtpa) and Mangalore (5mtpa). The country imports around 3mtpa of LNG, or 12 million standard cubic metres per day (mscmd) of gas that is bought in the spot markets.
NTPC had to alter its strategy after the government decided that the Dabhol terminal would not be hived off and that the 2,160MW RGPPL would function as an integrated project. The Dabhol terminal will initially have a capacity of 1.2mtpa, which will be increased to 5mtpa by 2010.
NTPC is looking for gas blocks overseas in an effort to find fuel to power its plants in India. This will help the company procure gas at much lower prices than those in the spot markets, even after accounting for investments in gas blocks, liquefaction, regasification and shipping.
The company will need to invest around $1.7 billion (Rs6,732 crore) in building an LNG liquefaction terminal in Nigeria and setting up a re-gasification terminal in India. It would be easier for the company to acquire one because it has never set up a regasification terminal before.
However, Sankaralingam said the company could “develop the competency ofbuilding and running an LNG terminal.”
NTPC has seven power plants fuelled by gas or liquid fuel with a total capacity of 3,955MW; it also runs a 740MW gas-based plant under a joint venture. Securing gas supplies would help NTPC as its gas-based projects are currently operating at lower levels of utilization and efficiency because of inadequate availability of the fuel.
“LNG terminals are large sized projects. However, NTPC will require a technology partner to set up this terminal. With the right technology partner they will be able to develop this terminal successfully,” said Ravi Mahajan, a partner at audit and consulting firm Ernst and Young.