FICCI favours LNG imports through tankers

By Sushma Ramachandran

NEW DELHI, JUNE 28. The Federation of Indian Chambers of Commerce and Industry (FICCI) is in favour of importing gas in the form of liquefied natural gas (LNG) in tankers rather than through the overland pipeline route. It says importing gas through cross country pipelines is an expensive proposition and may not be feasible in the light of ``regional differences'', evidently referring to the controversies over gas supplies from Bangladesh and the proposed Iran-Pakistan-India pipeline.

In the case of Bangladesh that has large natural gas reserves bilateral talks on possible export to India have been bogged down by apparent doubts over the size of the reserve. The Bangladesh government has been insisting that it is not yet clear whether the reserves are sufficient to supply to India. This is despite the fact that Unocal of the U.S. is developing a gas field in Bangladesh with the stated aim of exporting gas via pipeline to India.

The other proposal for an onland pipeline from Iran via Pakistan to India has now been referred to an Indo-Iranian joint working group and a feasibility study has been commissioned. The problematic security aspect for the overland pipeline had stalled the project till recently and the Indian Government had sought studies on other options of a sub-sea pipeline and shipment of LNG. With Pakistan is now keen to have the pipeline traverse its territory and gain the revenue due on this account, reports indicate that the overland gas pipeline project may even be raised at the forthcoming Indo-Pakistan summit meeting.

The FICCI, on the other hand, considers LNG imports to be ``a more realistic option''. This is despite the fact the country has inadequate infrastructure now in terms of ports and pipelines. In a study paper on LNG imports, the chamber notes this is sought to be remedied with heavy investment being approved in the infrastructure needed to support increased use of natural gas, building LNG import terminals and pipelines.

The biggest projects are in the state sector and will be carried out by Petronet, a joint venture between the Oil and Natural Gas Corporation, the Indian Oil Corporation (IOC), the Gas Authority of India Limited (GAIL), the National Thermal Power Corporation (NTPC) and Gaz de France. Under the current plan, each of the state-owned firms would own a ten per cent stake, the Gujarat Government will have a five per cent shareholding and the balance will be offered to private investors. This could include an equity stake for Qatar's RasGas, the main supplier of LNG for the project.

Petronet plans two import terminals, one at Dahej and the other in Cochin. RasGas is to begin supplying LNG to Petronet from the end of 2003. The consortium hopes to resolve financial issues that have delayed implementation of the project and reach financial closure by March 2001.

Other projects include a consortium headed by British Gas and including the NTPC which is planning an import terminal at Pipavav to supply LNG to Gujarat. TotalFinaElf of France in a joint venture with Tata Electric and GAIL is planning a facility at Trombay which will supply gas to a power plant and other users in Maharashtra. Shell has been given approval for an LNG import terminal at Hazira in Gujarat and is negotiating for LNG supplies from Oman. Reliance Industries also plans an LNG import terminal at Jamnagar in Gujarat near its oil refinery.

The FICCI has pointed out that in the foreseeable future, the country will be deficient in liquid hydrocarbons that also carry with them the baggage of unavoidable pollution hazards. Thus, it has stressed that a stronger focus is now necessary to tie up for long term gas imports.

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