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India's Petronet considers LNG reload option at Kochi terminal

08 May 2014 16:39:22 | glm


Indian state-owned LNG company Petronet is considering the launch of an LNG reload service from its 5mtpa Kochi terminal in the next few months in a bid to increase capacity utilisation.

“We have received expressions of interest from interested parties and depending on the commercial viability we will launch the reload services,” a senior Petronet official told ICIS.

The Kochi LNG terminal has been hit by low utilisation since beginning commercial operations in January due to the lack of planned pipelines to connect it with gas markets in Bangalore and Mangalore. Despite the terminal being located in a special economic zone it has operated at just 5% of capacity, according to Petronet.

Looking ahead, with a dispute over the cancellation of an 860km-long (535 mile) pipeline contract to Bangalore now to be resolved in the Supreme Court, it could take some time for domestic regasified LNG demand from Kochi to increase.

Petronet is, however, in talks with gas network operator GAIL to restart work on the pipeline and could reach an out-of-court settlement.

In the interim, some sources point to interest in leasing out storage capacity at the terminal hinging on whether Kochi can re-export.

“The capacity at Kochi could be used for reload operations by Middle East sellers who can use the terminal for storing LNG when demand in Asia wanes,” said Tarun Lakhotia, analyst at Indian investment bank Kotak Securities.

Petronet launched a tender in April to lease out capacity at Kochi’s two 182,000cbm storage tanks for an initial period of two years. The tender closed on 30 April, and Petronet is expected to prepare a shortlist of interested parties within the next six weeks.

Petronet signs third RasGas deal

Petronet has started receiving volumes in a new 0.80mtpa short-term supply agreement with Qatar’s RasGas, lasting from April to December this year, a senior Petronet official told ICIS.

The short-term deliveries that Petronet will receive at Dahej will supplement two existing RasGas long-term contracts totalling 7.5mtpa which Petronet can take into the 10mtpa terminal in the state of Gujarat.

A second jetty at the terminal, installed this year, will facilitate LNG arrivals for Petronet as well as other capacity holders, GAIL and GSPC.

Last year, approximately 9.5mtpa was imported into Dahej in total, of which 1.9mtpa was not on a long-term basis, customs data indicates.

India imported 17 billion cubic metres – or 12.1mtpa – of LNG last year, down 4.8% compared to 2012, according to the latest data from international gas association CEDIGAZ.

Depending on demand, Petronet may sign contracts of a similar nature with RasGas next year, the official said. Ranjana Kaushal

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