LNG continues to be economical despite price rise: Petronet MD

jasleen

Jasleen Kaur | November 1, 2014


Petronet LNG managing director and CEO AK Balyan
Arun Kumar

Petronet LNG Limited (PLL) is a joint venture of the government of India and leading oil and natural gas industry players –  GAIL (India) Limited, Oil & Natural Gas Corporation Limited (ONGC), Indian Oil Corporation Limited (IOCL) and Bharat Petroleum Corporation Limited (BPCL). Tasked with importing liquefied natural gas (LNG) and setting up LNG terminals in the country, Petronet LNG Limited is one of the fastest growing companies in the energy sector. It has set up the country’s first LNG receiving and re-gasification terminal at Dahej, Gujarat, and another terminal at Kochi, Kerala.

Petronet LNG managing director and CEO AK Balyan, an M. Tech. from IIT Delhi who joined the company in July 2010, speaks with Jasleen Kaur about upcoming projects and other issues. Edited excerpts:

Can you tell us about the progress at the Dahej terminal?
The Dahej terminal’s capacity is being expanded from 10 million metric tonne per annum (mmtpa) to 15 mmtpa. All EPC (engineering, procurement and construction) contracts have been awarded, and the expanded capacity is scheduled to complete by the end
of 2016.

What kind of growth are you looking at this fiscal?
The Dahej terminal is operating at more than its nameplate capacity of 10 mmtpa and is likely to maintain the same level during this fiscal.

Which sectors are you looking at for switch from other fuels to LNG?
Power and fertiliser are the key consuming sectors which we are looking at. However, they are encumbered with challenges on the pricing front due to regulated tariffs and output prices. We expect increased demand from the refinery, petro-chemical, industrial and city gas distrbution (CGD) sectors depending on the price of LNG.

Gas is a better fuel than diesel or petrol. That was the argument also for introducing CNG in transport sector. But its price has increased tremendously over the years. Will the LNG price scenario be any different?
The price of LNG is linked with the crude price which is currently prevailing in the range of 13-14% and has 70% oil parity. LNG continues to be economical in comparison to competing fuels such as naphtha, FO, diesel, etc.

You are offering a low rate to Fertilisers and Chemicals Travancore Ltd, one of your customers at Kochi, which had stopped buying gas. What is the response from FACT?

We understand FACT is facing challenges with respect to subsidy from the government and has sought a revival package. We are offering LNG at a competitive uniform price in Kochi and offered the same price to FACT. However, we are yet to receive their reply on the same.

What has been the response from the Kerala government on your proposal to set up a gas-based thermal power station at Puthuvype?
Earlier, the state government evinced interest in the gas-based power plant.  A detailed feasibility study has been completed and report was submitted to the state government. PLL has sought a minimum 75% guaranteed offtake of power and non-applicability of merit order dispatch from the state government. They have to take a decision.

What is the reason for the delay in setting up of natural gas pipeline from the Kochi terminal to Bangalore?
GAIL is laying the Kochi-Bangalore pipeline network. However, there is delay due to the issues pertaining to ROU (right of use of land) between state government and GAIL. The matter is sub judice. 

When do you expect it to be fully operational? What are your expectations from the Kochi pipeline?
GAIL has informed us that upon the resolution of the prevailing issues it would take around 10-12 months to complete the pipeline. We understand that after the completion of the connecting pipeline, we would be able to operate the Kochi terminal at more than 60-70% of its capacity.

A lot was expected from this terminal but it has been delayed. How does the company plan to manage growth?
As you are aware that the Kochi terminal was commissioned in September 2013. However, in the absence of a connecting pipeline it is being operated at a very low capacity. Upon the availability of pipeline connectivity, PLL expects that like Dahej, the Kochi terminal would also contribute to the growth of Petronet.

How do you foresee Petronet in next five years?
PLL has a vision to have a nameplate capacity of 30 mmtpa by 2020 and in this direction we are in the process of expanding the Dahej plant to 15 mmtpa with a provision for further expansion up to 20 mmtpa. The Kochi terminal is likely to operate at a higher capacity after the completion of the pipeline. We have also initiated the process of setting up of another terminal of 5 mmtpa capacity on the east coast at Gangavaram in Andhra Pradesh.

The interview appeared in November 1-15, 2014 issue

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