Reliance Power, Shell consortium to set up LNG terminal on East coast

New Delhi: Reliance Power, Shell and Kakinada Sea Ports Ltd (KSPL) consortium propose to set up a five-million-tonne a year expandable to 10 million tonne gas import terminal on the East coast.

Setting up such a terminal will require an investment of about $1 billion. The partners expect the terminal to be ready by 2014. While the project will mark the entry of the Anil Dhirubhai Ambani Group into the LNG business, it will be Shell's second such project in India after Hazira.

Shell and Reliance Power will hold the majority of the equity in the terminal company. The terminal will help in continued supply of gas for Reliance Power's gas-based 2,400 megawatt Samalkot power plant.

The Government has recently done away with import duty on natural gas/LNG for power generation.

In a statement issued here, the joint venture players said an agreement to undertake joint technical studies and commercial agreements was signed last December.

It said the LNG import and re-gasification terminal at the Kakinada Deepwater port in Andhra Pradesh was moving to its next phase of implementation.

With the completion of studies and agreements, the consortium has finalised the specific location of a Floating Storage and Re-gasification Unit (FSRU)-based receiving terminal adjacent to the existing island breakwater, thus minimising terrestrial impact as little or no onshore facilities will be required.

Besides the location, the orientation and specifications of the FSRU have also been agreed. The consortium is currently engaged with FSRU suppliers for selection of a preferred provider.

Mr De la Rey Venter, Global Head of LNG, Royal Dutch Shell, said, “India is an important market for LNG and Gujarat and Andhra Pradesh have the highest demand for gas in India. After the success of Shell's Hazira terminal in Gujarat, Shell is keen to set up an LNG receiving terminal in AP.”

Mr J.P. Chalasani, CEO, Reliance Power Ltd, said, “We believe Shell, with its large LNG portfolio and experience in operating LNG terminals will add immense value to the project.

“Kakinada, with its proximity to our Samalkot power plant and several other gas consumers, is a natural choice for setting up an LNG terminal.”

Andhra Pradesh has gas-based power capacity of 3,500 megawatt and additional 4,500 megawatt is in an advanced stage of implementation to meet the shortfall in the State.