New Delhi: India's first east coast LNG import terminal at Ennore in Tamil Nadu will help Indian Oil Corp (IOC) fast-track its city gas distribution plans, according to Wood Mackenzie.
The 5 million-tonne-per-annum (MTPA) liquefied natural gas (LNG) import and regasification terminal, built by IOC at a cost of ₹5,150 crore, was commissioned earlier this week.
"IOC has already secured captive customers for 2 MTPA of capacity. The Ennore terminal will also help fast-track IOC's city gas distribution plan, as gas from the terminal will be supplied to consumers around Chennai and Madurai," Wood Mackenzie's senior analyst Kaushik Chatterjee said in a report.
India plans to double its LNG import and regasification capacity to 56.5 MTPA by 2025 to meet the energy needs of a fast-growing economy.
In order to supply natural gas to various consumers, IOC is laying a 1,244-km pipeline for evacuation of gas from the Ennore terminal. The pipeline from the terminal will go up to Madurai, Trichy and Tuticorin in Tamil Nadu and branch out to Bengaluru via Hosur in Karnataka.
Imported gas at the terminal will meet fuel requirement of Chennai Petroleum Corp, Madras Fertilisers, Tamil Nadu Petroproducts and Manali Petrochemicals.
Ennore LNG terminal is part of India's plan to raise the share of natural gas in the country's energy basket to 15% by 2030 from current 6.2%.
"In the longer term, Ennore could become integrated with India's national gas network via a pipeline to Vijayawada or Kakinada in Andhra Pradesh. Historically, delays in intra-state pipeline construction have impeded gas and LNG usage in India. The pipeline connecting the Kochi regasification terminal in Kerala to Mangalore in Karnataka is a glaring example," Chatterjee said.
IOC, he said, has additional plans to connect remaining refineries to gas pipelines, which will likely at least double its gas demand.
IOC has signed a 0.7-MTPA contract with Mitsubishi for 20 years, with supply coming from Cameron LNG in the US.
"We believe the commissioning of Ennore may also lead IOC to source more LNG directly rather than via Petronet LNG Ltd," he said.
India has four LNG import and regasification terminals on the west coast — a 15 MTPA Dahej plant in Gujarat operated by Petronet LNG , Shell's 5-MTPA Hazira terminal in the same state, GAIL's 1.2-MTPA plant at Dabhol in Maharashtra and Petronet's 5-MTPA terminal at Kochi in Kerala.
"India's regas capacity had constrained imports in recent years. Both Dahej and Hazira operated at maximum levels through much of 2018. The commissioning of Ennore will be the first in a series of regas projects coming online in 2019; Mundra (in Gujarat) and Jaigarh FSRU are next," the consultancy said.
Another terminal is under construction at Dhamra in Odisha and is expected to be completed in 2022.
Furthermore, Dahej’s capacity is being increased by 2.5 MTPA to 17.5 MTPA , while the completion of the Kochi pipeline and Dabhol breakwater is also likely by 2020.
"Once all these terminals and enhancements are completed, India's regas capacity will reach 56.5 MTPA by 2025 from the existing 25.5 MTPA. Beyond this, India's ability to import significant volumes of LNG could be enhanced further if several other proposed regas terminals proceed," it said.
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