GAIL and GDF Suez Sign Construction Agreement for $800 Million Kakinada Floating LNG Terminal

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--GAIL (India) Limited (BSE:532155) (New Delhi) and GDF Suez LNG (UK) Limited (London, England) have signed an agreement to construct a floating LNG terminal that will benefit Indian gas-fired power projects that are only able to operate at 50% plant load factor (PLF) because of a lack of adequate gas supplies.

The $800 million floating storage regasification unit (FSRU) will be built at Kakinada sea port on India's east coast in Andhra Pradesh, and will be designed with a processing capacity of 15 million standard cubic meters (MMSCM) per day. Plans indicate that it will be operational by the end of 2013.

The state government, through Andhra Pradesh Gas Distribution Corporation (APGDC), is scheduled to sign an agreement with GDF Suez LNG this week for the supply of gas to power stations. The FSRU project will provide for an additional 3,000 megawatts of power in the state, with an average cost of approximately $0.12 per kilowatt-hour (kWh) against a variable cost of about $0.17 per kWh.

Current domestic production is not adequate to meet the needs of electricity consumers, including the non-priority sectors such as city gas distribution, and the ceramic and steel industries. The gas supply of 5 MMSCM a day in the state maintains the 50% PLF, but now the government has allocated about 9.5 MMSCM per day from the Krishna-Godvari D6 gas fields to independent power producers.

Gas-powered power projects totaling 4,000 MW are at the commissioning stage and require a further 20 MMSCM a day of natural gas.

The state government reported that although there were three operational LNG terminals on the country's west coast, there was no regasified LNG infrastructure on the east coast.

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