Pipelines run from the dock to liquefied natural gas (LNG) storage tanks, unseen, at the Haldia Dock Complex (HDC), part of the Kolkata Port Trust (KoPT), in Haldia, West Bengal, India. (Photographer: Sanjit Das/Bloomberg)

Petronet LNG Hopes To Get Clearance For $350-Million Sri Lanka Project By August 

Petronet LNG Ltd. is likely to finalise Sri Lanka's first liquified natural gas terminal project in Colombo and expects to receive commercial clearance by August.

The project capacity is 2.6-2.7 million tonnes and would cost around $350 million, Prabhat Singh, chairman and managing director of the state-owned LNG importer, told BloombergQuint in an interview today on the sidelines of 16th International Energy Forum in New Delhi.

Speaking on the Dahej plant, he said the company is expanding the terminal capacity by 2-2.5 million tonnes to 17.5 million tonnes, that too before the committed deadline of third quarter of this financial year.

Here are edited excerpts.

How has been the demand in financial year 2017-18 and what is your outlook for FY19?

We have been importing around 20 billion tonnes of LNG on an annual basis. This year is not different. It is a shade higher maybe, 5 percent or so. Customer base has to be improved and infrastructure has to come in. Although the prices are going down, and we should see a spurt in the demand.

We are also working on small scale LNG. LNG as a fuel has been approved in trucks and buses. It has a potential for some 25,000 trucks coming on road and some 85,000 new buses coming on the road. It has a potential of nearly 8-9 million tonnes of energy but that requires a good ecosystem to monetise. It will take time but this sector has potential of that level so we can increase the import of LNG by nearly 1-1.5 times effectively.

What has been your overall utilisation in Dahej and Kochi? How much will it increase to in FY19?

Dahej has been operating at around 110 percent. We had reached Kochi terminal up to 16 percent but it has shown a dip of around 9-10 percent  because FACT (Fertilisers and Chemicals Travancore) has stopped drawing gas from there, and infrastructure is still not up. But now Kochi- Mangalore pipeline is coming up by June-July, it should be done. Even on a pessimistic basis, by October-November the pipeline should be there.

If that is there, at least the capacity to be utilised would be more than 40 percent. We may jack it up to around 20-25 percent. Talking about Dahej terminal, we are expanding the terminal capacity by 2-2.5 million tonnes to 17.5 million tonnes. We have committed to do it by third quarter of 2019 but we feel we may be able to do it earlier. Dahej terminal will run full capacity the day it gets commissioned.

What is the status of the LNG terminal project in Sri Lanka?How much will you invest and by when do you expect it to complete?

We are in the process of bringing it down to a closure and we will be doing a feasibility study there. Once it is done, we will be having discussions with the Sri Lankan government. Once that is done, we anticipate that the capacity there would be around 2.6-2.7 million tonnes and the expenditure there should be around $300-350 million. We will take around 24 months from the time we get the final clearance of the commercial proposal. That may be another 4-5 months from now.

What has been the tariff hike in 2018? And what will be the incremental revenue that will come in because of the hike?

Normal tariff hike is around 5 percent. We should be getting profits in terms of last year by around Rs 100-125 crore.

What do you expect to be the growth in LNG consumption?

As of today, we are importing 20 million tonnes LNG annually and we anticipate that it should go up by around 5-7 percent.

Petronet LNG aims to partner with ONGC Videsh Ltd. to pick up a stake in exploration and LNG project in Qatar. Can you take us through the plan?

It is at a very nascent stage. We are exploring the possibility because when we had signed the earlier contract with Qatar, we had the option of taking 5 percent equity in upstream. At that point of time, Oil and Natural Gas Corp. Ltd. was the partner which we had put forward. It did not materialise somehow but now since they are expanding from 77 million tonnes to 100 million tonnes, out of the balance 23 billion tonnes, we had put in a request.

We had made a team with OVL and will be sending this team to Qatar to evaluate their upstream bloc because this 5 percent is not like the earlier one which was in the liquefaction terminal. This is actually in the bloc as well of the liquifaction terminal. We have to decide how much equity will be taken up 5 or 10 percent, and how much will we invest. The team will be visiting within May. We would like to involve all the oil marketing companies because it would be a big project.