India's Petronet LNG to Double Capacity at Kochi Terminal

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Researched by Industrial Info Resources (Sugar Land, Texas)--Petronet LNG Limited (BSE:532522) (New Delhi) , a consortium promoted by state-owned energy firms such as GAIL (India) Limited (BSE:532155) (New Delhi), Oil & Natural Gas Corporation Limited (BSE:500312) (ONGC) (Mumbai, India), Indian Oil Corporation Limited (BSE:530965) (IOC) (Mumbai) and Bharat Petroleum Corporation Limited (BSE:500547) (BPCL) (Mumbai), has decided to double the capacity of a proposed liquefied natural gas (LNG) terminal at Puthuvypu, near Kochi in Kerala, from 2.5 million to 5 million tons per year to meet the increase in demand for gas in the state.

Petronet already has secured 1.5 million tons per year of LNG from the proposed Gorgon project, which is operated by Chevron Australia in a joint venture with ExxonMobil (NYSE:XOM) (Irving, Texas), and is in talks with Middle Eastern countries, including Qatar, for a gas supply for its Kochi terminal.

The total investment cost of the expansion project is $887 million. The commissioning of the terminal will have a positive impact on downstream industries, such as Fertilizers and Chemicals Travancore Limited and the National Thermal Power Corporation plant at Kayamkulam in Kerala, which will switch from naphtha to LNG for fuel.

GAIL India Limited will lay a sub-sea pipeline from Kochi to Kayamkulam to supply LNG to the National Thermal Power Corporation unit. Plans have been completed for laying the pipeline from Kochi to Mangalore and then to Bangalore; and Kochi to Kayamkulam and then to Thiruvananthapuram. Undersea pipelines from Kochi to Kayamkulam are complete. The first phase of the project will be ready in the next 18 months, and the second phase will be ready by 2013. The work on the Thiruvananthapuram-Kayamkulam stretch will be taken up on the basis of demand for LNG in the state capital.

The terminal involves two LNG storage tanks, each with a 160,000-cubic-meter storage capacity; send-out and regasification facilities suitable for handling 5 million tons per year of LNG; and associated facilities and marine or offshore facilities, including the jetty, berthing/unberthing and mooring / unmooring of LNG Tankers and other associated facilities required for all weather operations of LNG ships, ranging from 65,000- to 216,000-cubic-meter capacity. There will be a captive power plant in the terminal.

The Company is implementing the project through three separate EPC contractors: IHI Corporation (JP:7013) (Japan) as a storage tank contractor, CTCI Overseas Company Limited (TT:9933) (Taiwan) as a regasification facilities contractor, and Afcons Infrastructure Limited (Mumbai) as an off-shore marine facilities contractor.

Kochi's terminal expansion is moving according to the schedule; more than 30% of the construction has been completed. The terminal is expected to be commissioned by March 2012.

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