The Hindu : Dahej LNG terminal commissioned

Online edition of India's National Newspaper
Tuesday, Feb 10, 2004

Business

Business

Dahej LNG terminal commissioned

By Sushma Ramachandran

DAHEJ (GUJARAT), FEB. 9. India's first LNG (liquefied natural gas) terminal was today dedicated to the nation by the Union Petroleum Minster, Ram Naik.

Speaking on the occasion, Mr. Naik said this would help provide the much-needed energy security to the country. This would also meet the natural gas needs of six States — Gujarat, Madhya Pradesh, Uttar Pradesh, Rajasthan, Delhi and Haryana.

The Dahej terminal and related infrastructure facilities including two LNG tankers have been set up at a cost of Rs. 7,500 crores. Besides, Rasgas of Qatar has invested Rs. 5,500 crores to develop offshore gas production and liquefaction facilities for supply of LNG to the Dahej port. India has entered into an agreement with Rasgas to import five million tonnes annually of LNG for 25 years. Though the agreement with Rasgas was said to be "highly competitive,'' it may translate into fairly high prices for the domestic consumers, about $4.6 a million BTU (British thermal units). As a result, the Government had deferred a decision on gas pricing till after the elections.

Mr. Naik agreed in principle to a request made by the Gujarat Chief Minister, Narendra Modi, for a 5 per cent equity stake in Petronet LNG (PLL) that has implemented the project. Though the State Government initially had an option to pick up a 5 per cent stake in PLL, it had not exercised it till now. However, at this juncture, the Petroleum Minister pointed out that the Securities and Exchange Board of India would have to be consulted before a final decision was taken as PLL had already announced it would go in for a public issue. Mr. Modi had said that Gujarat needed to become a partner in this venture to speed up economic development.

Mr. Naik said the gas from the Dahej terminal would create additional capacities for compressed natural gas (CNG) and would also provide domestic gas to millions of homes. "This is just the beginning. The Dahej terminal can be expanded at a low cost and the project shall soon be augmented to tap the new markets within Gujarat and Maharashtra.''

Earlier the Petroleum Secretary, B. K. Chaturvedi, said that yet another major initial public offer was on the cards. The PLL, which had implemented the Dahej project, would be go in for a public issue probably on February 17.

PLL has been promoted by the four major oil companies, the Oil and Natural Gas Corporation, the Gas Authority of India Ltd., the Indian Oil Corporation and the Bharat Petroleum Corporation which hold a total of 50 per cent equity. In addition, Gaz de France, a leading European gas company, has taken 5 per cent equity. The public issue will be for the balance 35 per cent equity to broadbase its shareholding.

At the dedication ceremony that was attended by Mr. Modi and the Qatar Finance Minister, Yousef Kamal, Mr. Naik said an investment of Rs. 7,700 crores had been made in the LNG supply chain for the project. The terminal was built in a record 36 months at a reduced project cost of $550 milllion (original $686 milion). This had been possible due to technical innovation in desiging facilities, competitive bidding for contracts, and financial engineering.

The LNG brought in by the tankers from Qatar will be regassified at Dahej and supplied to consumers through the HBJ gas pipeline. The five million tonnes import is estimated at one third of the country's current domestic availability and the complex is designed to be expanded at low cost to 10 million tonnes annually.

PTI reports

GAIL to sell LNG at $4.6

GAIL India today said it would sell liquefied natural gas imported from Qatar at $4.6 per million BTU in Gujarat.

It will sell LNG at $4.3 million BTU outside Gujarat, where sales tax is lower than 22 per cent levied in Gujarat, the GAIL Chairman and Managing Director, Proshanto Banerjee, told PTI on the sidelines of dedication of Dahej LNG import terminals here.

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