Indian Oil May Start Importing LNG Directly: WoodMac
With the commissioning of its Ennore LNG receiving terminal in south India, state-owned Indian Oil Corporation (IOCL) may source more LNG directly rather than via Petronet, Wood Mackenzie said in a note published March 7.
“IOCL has signed a 0.7mn mt/yr contract with Mitsubishi for 20 years, with supply coming from Cameron LNG in the US. We believe the commissioning of Ennore may also lead IOCL to source more LNG directly rather than via Petronet,” WoodMac senior analyst Kaushik Chatterjee said. Petronet is India's biggest LNG importer and further supplies regasified LNG to customers such as Gail and IOCL.
Indian prime minister Narendra Modi March 6 inaugurated the LNG import terminal at Ennore in the southern Indian state of Tamil Nadu. The 5mn mt/yr LNG terminal is located at Kamarajar Port in Ennore. IOCL holds 95% stake in the Ennore LNG import terminal; Tamil Nadu Industrial Development Corporation has the remaining 5%. It is the first terminal on India's east coast.
"IOCL has already secured captive customers for 2mn mt/yr of capacity. The Ennore terminal will also help fast-track IOCL's city gas distribution plan, as gas from the terminal will be supplied to consumers around Chennai and Madurai,” he said.
According to Chatterjee, more LNG import terminal projects are expected to come online in next couple of years.
"Indian regas capacity had constrained imports in recent years. Both Dahej and Hazira operated at maximum levels through much of 2018. The commissioning of Ennore will be the first in a series of regas projects coming online in 2019; Mundra and Jaigarh FSRU are next,” he said. Dahej is operated by Petronet while Hazira is operated by Shell.
One additional terminal is under construction at Dhamra on India's east coast and is expected to complete in 2022. Furthermore, Dahej's capacity is being increased by 2.5mn mt/yr to 17.5mn mt/yr, while the completion of the Kochi pipeline and Dabhol breakwater are also likely by 2020.
"Once all these terminals and enhancements are completed, India's regas capacity will reach 56.5mn mt/yr by 2025 from the existing 25.5mn mt/yr. Beyond this, India's ability to import significant volumes of LNG could be enhanced further if several other proposed regas terminals proceed," Chatterjee said.