GAIL, IOC ink pact with Dhamra LNG project

New Delhi: State-run gas utility GAIL India Ltd and refiner Indian Oil Corp (IOC) today signed an initial pact to join Adani Group-promoted Rs 5,000-crore Dhamra LNG project in Odisha.

The agreement comes within weeks of GAIL dropping plans to set up a floating LNG import terminal at Paradip. IOC too had in 2012 signed a MoU with Dhamra LNG Port Corp Ltd (DPCL) to develop a liquefied natural gas (LNG) terminal at the port.

Two firms today signed a memorandum of understanding (MoU) with Dhamra LNG Terminal Pvt Ltd, a company owned by Adani Enterprises, for setting up of 5 million tonnes a year LNG import terminal, GAIL said in a press statement here.

Sources said GAIL and IOC may hold half the stake in the project while the remaining may be with Adani.

Dhamra will be the sixth LNG project announced on the east coast. While GAIL has dropped plans of a four million tonnes project at Paradip, Petronet LNG Ltd — a firm in which GAIL and IOC are promoters — has put on cold-storage plans to set up a five million tonnes a year LNG import facility at Gangavaram in Andhra Pradesh.

GAIL, along with GdF and Shell, has proposed a 3.5 million tonnes floating LNG terminal at Kakinada while IOC plans a five million tonnes facility at Ennore in Tamil Nadu.

Real estate player Hiranandani Group plans to set up a Rs 2,400 crore, 4 million tonnes floating LNG import terminal off Haldia in West Bengal.

With GAIL, which owns and operates bulk of the nation’s cross country pipelines, and IOC, which is a big user of gas and will need the fuel at its just commissioned Paradip refinery, joining Dhamra, the fate of LNG terminals in Andhra Pradesh is uncertain. Dhamra can meet all of the demand in Odisha and Andhra Pradesh.

Dhamra port in Bhadrak district of Odisha is an all-weather deep water port, the GAIL statement said.

“As per the terms of MoU, IOC and GAIL would reserve re-gasification capacity in the terminal to supply re-gasified LNG in the emerging gas markets in the eastern part of the country.

“IOC and GAIL would also have the option to hold equity in DLTPL at a later date,” the statement said.