India's largest gas importer, Petronet LNG Ltd, is seeking to reclaim lost opportunities after missing out on petrochemical opportunities over the past decade. It has plans to build an LNG import facility on the east coast. Petronet's Chairperson Tarun Kapoor, who is also the Oil Secretary, said in the firm's latest annual report that the company is planning to establish a floating terminal at the port of Gopalpur in Odisha and is seeking to broaden its business activities by establishing an ethane/propane import facility at Dahej terminal as part of its diversification strategy.

The company was planning to build a terminal for supercooled gas imports at Gangavaram in Andhra Pradesh a few years ago. As of 2015-16, the company's management has stopped pursuit of that terminal due to lack of demand for a 5 million tonnes a year import facility.

Gangavaram would have been the first terminal on the east coast as Petronet owns and operates facilities at Dahej in Gujarat and Kochi in Kerala. Soon after that Adani Group began work to set up a 5 million tonnes a year import terminal at Dhamra port in Odisha.

Sources say Petronet sees that the eastern region now has a need for gas, and despite the LNG terminal at Dhamra, it is now looking for another facility at Gopalpur. Similarly, the company is trying to recapture the lost opportunity in the petrochemical sector.

Petronet's long-term contract with Qatar to import liquefied natural gas (LNG) provides 5 million tonnes of gas containing ethane and propane, two key components for making petrochemicals, each year. That rich-gas was supplied to Oil and Natural Gas Corp (ONGC) which after stripping it of ethane and propane re-supplies to Petronet for onward sale to power plants, fertilizer units and other customers.

The source said ONGC uses the rich gas at its petrochemical plant to make value-added chemicals. Now, Petronet is looking to use the same model. “Petronet has also planned for setting up of a petrochemical complex based on imported propane at Dahej LNG Terminal”, Kapoor said in the annual report. “The foray into petrochemicals would be a forward integration of our strategy as the same planned to get synchronised with our upcoming third jetty project and available land bank at Dahej.”

However, he did not provide details on the planned petrochemical complex, including the investment and size of the plant. Raw materials for plastics, packaging materials, and personal care products are derived from petrochemicals, which are made using crude oil and natural gas as feedstock.

In terms of volume, the petrochemical market in India stood at 42.50 million tonnes and is estimated to reach 49.62 million tonnes by 2025, expanding at a compound annual growth rate (CAGR) of 6.14 per cent between FY 2021 and FY 2025.

Petronet is 50 per cent owned by state-owned refiners Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL), gas utility GAIL (India) Ltd and oil and gas producer ONGC. The four companies sit on the board of the company, which is headed by the Secretary, Ministry of Petroleum and Natural Gas. The firm is looking into business opportunities connected with the regasification of cold energy from its Dahej and Kochi terminals, Kapoor said.

“Harnessing LNG’s cold energy not only maximises re-gasification terminals’ potential but also offers an opportunity to cut emissions in the cold warehousing chain simultaneously adding value and improving energy efficiency,” he said. After establishing a presence in the southern and western parts of the country Petronet is now planning to set up a floating LNG terminal at Gopalpur port in Odisha with a view of establishing its presence on the eastern coast of India, he said. “The LNG terminal will help meet the increasing gas demand of the eastern and central part of the country,” he added.

He added that Petronet has already completed the pre-project studies and is in process of preparing the Detailed Feasibility Report (DFR) for 4 million tonnes per annum floating storage & regasification (FSRU) terminal followed by a pre-feasibility report for a 5 million tonnes land-based terminal in future.

Petronet, he said, “has signed MoU (memorandum of understanding) with Gopalpur Ports Ltd and is in discussion with them to finalise the key technical and commercial terms of the agreements”. Without giving investment details or timelines for the project implementation, he said the firm is in process of obtaining the final investment decision for the project.

Dahej terminal is the largest import facility in the country, with a capacity of 17.5 million tonnes per annum. There is a 5 million tonnes capacity at the Kochi port, but the terminal runs at just a fraction of that because of no pipeline to carry the fuel to customers.

Image source: Marine Insight