India: LNG project at Krishnapatnam

Indian Oil Corporation (IOC), along with British Petroleum and Petronas, has chalked out a Rs 900 crore investment plan for a 2.5 million tonne per annum LNG project at Krishnapatnam in southern Andhra Pradesh. A 1000MW LNG-based power project will also be set up close to the site and IOC is already in talks for a strategic partner for this. Two prospective LNG suppliers, BP and Petronas, have already given a commitment to IOC that the price of the gas will be structured in a manner so as to achieve a levelised power tariff of around Rs 2.25/kwh from the project. Speaking to FE, director (business development) IndianOil, NK Nayyar said the power project, which will consume around 1 mtpa of re-gassified LNG, will be set up on build and operate basis and IOC will retain at least 26 per cent equity in this project. Another 0.5 mtpa may be consumed by IOC’s group refinery, Chennai Petroleum in Tamil Nadu. For the balance 1 mtpa of regassified LNG, there is a huge market in neighbouring states including Andhra Pradesh, Tamil Nadu and Karnataka. Mr Nayyar said IOC had appointed AT Kearney for an assessment of potential gas markets for supply of this 2.5 mtpa of regassified LNG. The demand in Andhra Pradesh, Tamil Nadu and Karnataka alone is over 10 mtpa and marketing the gas will not be a problem. Depending on the demand, the capacity of this terminal will be increased to 5 mtpa.

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