AP inks pact for floating LNG terminal

Vijayawada: The State government with an intent to strengthen the energy sector signed two MoUs on Friday for setting up a floating LNG Terminal at Kakinada Deep Water Port.

Speaking on the occasion, Chief Minister N Chandrababu Naidu expressed hope that both the domestic and international partners who had come together would bring the best expertise, technology from all over the world to complete the project in 18 months.

He described the LNG terminal as a great opportunity in the development of a project that shall ensure continuous availability of natural gas and support government’s gas grid which is one of the five grids.

He said Floating Storage & Regasification Unit (FSRU)-based LNG project is the fastest and most cost-effective way to secure energy supply while bolstering sustainable development and simultaneously cutting down on pollution and added that gas is the way to go as it dovetails world’s concerns about climate change.

Considering the State and country’s need for energy, Naidu said there are opportunities aplenty for scaling up. “This will be the first LNG terminal on the East Coast of India. In my efforts to boost port-led development, I realise that this project will help us in making the State a logistics hub,” he added.

Naidu added “This LNG Terminal would prove to be an important infrastructure for import of LNG on the eastern coast. Natural gas is emerging as a significant fuel for economic development of the country and this FSRU-based terminal will surely play a far reaching role in making natural gas available to various consumers in industrial, commercial and domestic sectors,”

The first MOU signed is the Terminal Company Agreement between APGDC, GDF Sues and Shell. It supports the development and execution of the terminal.

APGDC (a joint venture of AP government and GAIL), GDF SUEZ and Shell will have 48 per cent, 26 per cent and 26 per cent equity in the project respectively.

The second MOU is the trading company agreement between GAIL, GDF SUEZ and Shell and covers both the sourcing of LNG and the marketing of the re-gasified LNG from the terminal. GAIL, GDF SUEZ and Shell will have 48 per cent, 26 per cent and 26 per cent equity in the project respectively.

The MoU was signed in the presence of the Chief Minister and CMD of GAIL B C Tripathi, CEO of GDF Suez Philip Olivier, Anindya Chowdhury of Shell India and other executives from the companies.

The floating storage and Regasification Unit (FSRU) will be constructed at a cost of Rs 1,800 crore initially. The Kakinada LNG terminal will use the Floating Storage and Regasification Unit with a peak capacity of 5 million tonnes per annum (mtpa) with the provision to double the capacity.

The terminal will use high-end technology and will be one of the first-of-its-kind of PPP projects in India. The Kakinada port was found suitable for a project of this nature, owing to its availability of a natural break-water in the Hope Island – a barrier that protects against the impact of high seas.

In his address, BC Tripathi, CMD of GAIL, informed that the State gas utility has been anchoring the project and expressed confidence in meeting the deadline of 18 months. He said “As a booming economy, we will support the State and the country in pushing this project and put in our best efforts,”

Secretary (Infrastructure, Energy and Investments) Ajay Jain said that this is a step in making AP a gas hub. “There are massive reserves of gas in the KG-D6 and we need to realise that this will be the only LNG terminal on the East Coast.

So, if this project is successfully completed within 18 months, it will be the best example of PPP projects in the country,” he said, adding that this will also give a fillip to gas-based industries in the State.Ministers N Chinarajappa, Kamineni Srinivas and others were present.