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Indian Oil’s Ennore terminal set to fast-track city gas project

FE Bureau

The newly commissioned Rs 5,150-crore Ennore LNG import terminal in Tamil Nadu will help fast-track Indian Oil Corporation s (IOC) city gas distribution plan. Gas from the terminal will be supplied to consumers in and around Chennai and Madurai, said Wood Mackenzie, the global energy, chemicals, renewables, metals and mining research and consultancy group. The country s first east coast regasification project, Ennore LNG terminal, was commissioned on Wednesday by IOC.

Wood Mackenzie s senior analyst Kaushik Chatterjee, highlighted the significance of this project and how this marks the beginning of India doubling its regasification capacity to 56.5 million metric tonnes per annum (mmtpa) by 2025. He said: IOC has already secured captive customers for 2 mmtpa capacity. The Ennore terminal will help fast-track IOC’s city gas distribution plan.

Indian Oil, through its joint venture company, Indian Oil LNG, has developed this 5-mmtpa capacity LNG terminal at Kamarajar Port in Tamil Nadu’s Ennore at a cost of Rs 5,150 crore. It is to be noted that Tamil Nadu is an untapped natural gas market. In order to supply natural gas to various consumers, Indian Oil is laying a 1244-km pipeline for evacuation of RLNG from Ennore terminal. The pipeline from Ennore terminal will be passing through Manali, Thiruvallur, Puducherry, Nagapattinam, Madurai, Trichy, Tuticorin, Ramnathpuram and a separate line to Bengaluru via Hosur.

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In the longer term, Ennore could become integrated with India’s national gas network via a pipeline to Vijayawada or Kakinada in Andhra Pradesh. Historically, delays in intra-state pipeline construction have impeded gas and LNG usage in India. The pipeline connecting the Kochi LNG terminal in Kerala to Mangalore in Karnataka is a glaring example, Chatterjee said.

At present, there is very limited gas infrastructure in Tamil Nadu. The terminal would be meeting the gas requirement of the Manali area, which will have Chennai Petroleum Corporation, Madras Fertilizers, Tamil Nadu Petroproducts and Manali Petrochemicals. Further, natural gas from Ennore LNG terminal would also be catering to the gas requirements of Tamil Nadu and parts of Karnataka and Andhra Pradesh. It will provide added momentum to the economic growth of the region by attracting new industrial projects.

The company has additional plans to connect remaining refineries to gas pipelines, which will at least double its gas demand. IOC has signed a 0.7-mmtpa contract with Mitsubishi for 20 years, with supply coming from Cameron LNG in the US. We believe the commissioning of Ennore may also lead IOC to source more LNG directly rather than via Petronet, he said.

According to IOC, natural gas from the terminal would spur the development of upcoming City Gas Distribution networks in Chennai, Tiruvallur, Coimbatore, Salem, Kanchipuram and Ramanathapuram, which in turn would cater to the requirements of piped natural gas for households, CNG for automobiles and clean fuel requirements of commercial establishments and industries.

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The terminal has received all necessary clearances to commence commissioning. IndianOil has arranged LNG commissioning cargo from Swiss Trader, Gunvor. LNG cargo has been delivered through LNG ship Golar Snow from Qatar.

“Indian regasification capacity faced 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. Dahej s capacity is being increased by 2.5 mmtpa to 17.5 mmtpa, while the completion of the Kochi pipeline and Dabhol breakwater are also likely by 2020. One additional terminal is under construction at Dhamra on India s east coast and is expected to complete in 2022, Chatterjee said.

The LNG terminal at Ennore will usher in a green wave in South-Eastern part of India by offering natural gas as a clean and economically viable fuel, which will also help in reducing the carbon footprints. The Ennore LNG terminal project and associated pipeline infrastructure projects cumulatively account for investments to the tune of close to Rs 9,000 crore, said an IOC statement. The LNG terminal is part of India s plan to enhance the share of natural gas in the country s energy basket from the present 6.2% to 15% by the year 2030.

“Once all these terminals and enhancements are completed, India’s regasification capacity will reach 56.5 mmtpa by 2025 from the existing 25.5 mmtpa. Beyond this, India’s ability to import significant volumes of LNG could be enhanced further if several other proposed regas terminals proceed,” Chatterjee added.