Petronet to invest Rs 40,000 cr, including in overseas LNG plants

Petronet LNG Ltd, the operator of the world's largest liquefied natural gas (LNG) import terminal, will invest Rs 40,000 crore over next 4-5 years, including in overseas supply sources, its CEO A K Singh said on Thursday.

Petronet plans to make foray into the petrochemical business by investing Rs 12,500 crore in a Propane Dehydrogenation Plant that will convert imported feedstock into propylene, as well as set up a floating LNG import facility at Gopalpur in Odisha at a cost of Rs 1,600 crore, he told reporters here.

The firm, which had last year allowed an initial non-binding agreement to invest USD 2.5 billion in US energy upstart Tellurian's LNG project in Louisiana in return for gas supplies for 40 years lapse, will look at investing in overseas projects such as gas fields that feed into plants turning the fuel into liquid (LNG) and liquefaction plants.

"We always evaluate good opportunities for overseas investment. If it is beneficial for the country (and) if we find it a better option, definitely we will go for it," Singh said without elaborating.

LNG is natural gas cooled to -162 degrees Celsius to turn it into liquid for ease of transportation via ships.

India's domestic natural gas production barely meets half the demand of power, fertilizer and CNG sector and the rest is imported in form of LNG.

Singh said Petronet will invest Rs 17,000 crore in domestic LNG import capacity addition and petrochemical foray. The investment includes Rs 600 crore in raising the capacity of the Dahej LNG import terminal in Gujarat to 22.5 million tonne per annum from the current 17.5 million tonne, Rs 1,245 crore in building an additional storage tank and bays for truck loading of LNG.

The Dahej import terminal is the largest in the world and the port will host a third jetty where propane, ethane and LNG can be imported, he said.

Petronet, which operates a 5 million tonne a year import facility at Kochi in Kerala, will set up a 4 million tonne a year floating storage & regasification (FSRU)-based LNG import facility off the Gopalpur port that later will be turned into a land-based terminal with a higher 5 million tonne capacity, with scope for raising it in future, he said.

The company had some years back planned to set up a terminal at Gangavaram in Andhra Pradesh for the import of supercooled gas in ships. The company management stopped pursuing that terminal in 2015-16 on grounds that there isn't enough demand to justify a 5 million tonne a year import facility.

Gangavaram would have been the first terminal on the east coast.

Soon after that, Adani Group began work to set up a 5 million tonne a year import terminal at Dhamra port in Odisha.

Petronet now sees that there is demand for gas in the eastern region and despite the Dhamra LNG terminal, it is now looking for a facility at Gopalpur.

Petrochemicals, made using crude and natural gas as feedstock, form raw material for plastics, packaging material, and personal care products.

In terms of volume, the petrochemical market in India stood at 42.50 million tonne and is estimated to reach 49.62 million tonne by 2025, expanding at a compound annual growth rate (CAGR) of 6.14 per cent between FY 2021 and FY 2025.

Using ethane, plastics and detergents can be made; while propane can give plastic.

Petronet is 50 per cent owned by state-owned refiners Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL), gas utility GAIL (India) Ltd and oil and gas producer ONGC. The four companies sit on the board of the company, which is headed by the Secretary, Ministry of Petroleum and Natural Gas.

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