India: East Coast LNG Import Terminal on Fast Track

Faced with an ever widening energy gap, India is confronting the harsh reality that its enviable growth rate– projected at 7% by the World Bank for the next two years—is effectively capped by the chronic shortfall in the fossil basis. The huge shortfall in natural gas is sharply felt across a wide economic range, impacting power generation, industrial production, commercial expansion and the super critical fertilizer sector.

With no existing LNG import facility and suffering a steep drop in domestic production from the Krishna Godavari Basin’s fields, East Coast India has been particularly hard hit. Robust growth in coastal Andhra Pradesh, spurred on by the now-failed promise of plentiful domestic gas supply, has resulted in a large industrial belt that is studded with modern gas fired power stations, all having connectivity to the region’s well develop gas grid.
Aggregated to a total of 7,000 MW, these near idled power plants have an annual natural gas shortfall of close to 7 mtpa, and no viable source of domestic supply seen either near or far horizon.

Working quietly and with little fanfare over the past three years, VGS Group, an Indo-American company, has moved its 4.0 mtpa floating LNG import terminal project from the planning boards to its mooring site at Kakinada Deepwater Port and the shipyards of Shanghai; China based Wison Offshore is the project’s vessel builder in conjunction with the provision of regasification technology from Hamworthy Wartsila. The project has two stages, with Phase One providing a maximum send out rate of 1,000 mmscfd, while the second phase is slated for a service date tied to match market growth and will result in a doubling of the facility’s throughput capacity.

The Project’s innovative approach, employing the industry’s first barge based regasification facility, coupled to an additional LNG floating storage vessel, allows for the developer’s fast track timeline of a service date at the end of 2014 to remain on schedule.

Sited within the bounds of the port, operated by Kakinada Seaport Limited, and lying 8 kilometres off the coast, the projects two vessels will be moored at an offshore platform that has been designed by Moffat & Nichol in collaboration with Technip, Trelleborg, Wison Offshore & Marine and MEI.

This week VGS Group has formally issued invitations to a number of the LNG industry’s top rung players for an Expression of Interest in a share of the import terminal’s regas capacity and services, with plans to have executed Terminal Use Agreements in place by the last quarter of the current year.

In a recent press release, VGS President Gaurav Tiwari stated, “Our development process has been to anticipate when the tipping point would occur in the pent up natural gas demand requirements for East Coast India. This region really is Mother India’s awakening industrial giant. We sought to pace our first mover status and a fast track philosophy to meet this critical piece of timing. By bringing our success in being this first mover and with this innovative infrastructure and equipment basis, well, we believe these synergies create a new reality of growing prosperity for the businesses and people of Andhra Pradesh and Orissa.”