Mundra Port & Special Economic Zone Ltd. plans to build a five million ton liquefied natural gas terminal on India's western coast, signaling the Adani group's first foray into the natural gas import business.
The unit of energy and trading conglomerate Adani group will build the regasification terminal in Mundra with Gujarat State Petroleum Corp., Mundra Port Chief Financial Officer B. Ravi said late Wednesday.
He said both companies will have equal stakes in the Mundra LNG terminal.
Indian companies are increasingly depending on natural gas imports as local production of the fuel hasn't been able to keep pace with demand from the power sector and industrial units, despite large offshore discoveries.
The Mundra LNG terminal could largely help feed the Adani group's expanding city gas distribution business in India under Adani Gas. Also, group unit Adani Power Ltd. could possibly consider adding gas-based projects to its portfolio as it aims to ramp up to 20,000 megawatts of generation capacity--now mostly planned with coal--by 2020.
Still, it isn't yet clear where the terminal will source gas supplies from or whether the terminal intends to sell any of the gas it imports.
Meanwhile Wednesday, Mundra Port completed acquiring operating rights to Australia's Abbot Point X50 Coal Terminal for A$1.829 billion.
Although coal is the dominant fuel for electricity in India, demand for natural gas--considered cleaner and less price sensitive--is on the rise.
Mr. Ravi declined to comment on the potential cost and exact timeframe for the project, but said according to earlier plans construction was expected to start by the end of December.
"We're waiting for when GSPC [Gujarat State Petroleum Corp.] will give us the go-ahead [to begin construction]," he said.
GSPC couldn't immediately be reached for comment. GSPC is a unit of oil and gas explorer GSPC Group and is controlled by the government of Gujarat, the state in which the terminal is being set up.
Mr. Ravi said tenders have already been floated to invite bids and quotations for construction work of the Mundra terminal.
"There's serious work going on in that front and already the land which is required for the LNG terminal has been reclaimed."
India's growing energy deficit is being eyed by overseas companies too.
Earlier Wednesday, Russian energy giant OAO Gazprom said it signed initial pacts to supply up to 7.5 million tons of liquefied natural gas a year to three Indian companies.
Companies such as Petronet LNG Ltd., India's largest LNG importer by volume, are investing heavily to expand import capacity.
Source : WSJ
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