Kochi gas pipeline signed off by Indian court but still delayed

Ranjana Kaushal

16-Feb-2016

Despite support from the Indian Supreme court, construction work on the natural gas pipeline connecting the underutilised Petronet-run 5mtpa Kochi LNG terminal to different cities in southern India and the southwest coast is expected to suffer further delays due to protests by farmers and local elections.

The lack of pipeline connectivity has curtailed terminal usage and its utilisation rate is stuck at under 5%, according to terminal sources – by far the lowest among the four operational Indian LNG terminals.

Earlier this month, the Indian Supreme Court gave gas network operator GAIL permission to lay down gas pipelines across seven districts in Tamil Nadu. The length of this planned pipeline is estimated at 310km, according to GAIL.

The entire planned pipeline network connecting Kochi to Koottanad, Bangalore and Mangalore is estimated at over 1,000km, according to the government’s Petroleum and Natural Gas Regulatory Board data.

“The court decision is a positive step but the local farmers are still protesting. Several other hurdles also still exist,” a terminal source said.

The pipeline project has become a political issue with the planned state level elections in March-April. “The local government is supporting the farmers, so even if GAIL wants to start construction in some districts, it cannot. GAIL planned to start work on the pipeline this month,” the terminal source said.

In 2014, GAIL cancelled its 860km Kochi-Bangalore gas pipeline contract in the wake of opposition from farmers in Tamil Nadu. The pipeline was designed to pass through seven districts of the southern state, which covered 134 villages.

The current pipeline network in India is run by three entities – GAIL, private Indian conglomerate Reliance Gas Transportation Infrastructure Limited (RGTIL) and state-run Gujarat State Petronet Limited (GSPL). GAIL operates almost 11,000km of gas pipelines – or 71% of the network in the country and RGTIL and GSPL cover most of the remaining share.

GAIL and Petronet officials did not respond to ICIS queries on the Kochi pipeline project.

In order to generate some revenue from the Kochi terminal, reload and bunkering services were offered last year.

Swiss trading company Trafigura leased out storage capacity towards the end of 2014 for 18 months. The terminal carried out three reloads last year, according to ICIS LNG Edge data. It last received partial long-term volumes from Qatar at the turn of the year, according to ICIS data.

Terminal operator Petronet also runs the 10mtpa Dahej facility. ranjana.MK@icis.com



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