Andhra Pradesh govt signs 2 pacts for setting up LNG terminal

Published Sep 26, 2015, 2:22 am IST
Updated Mar 27, 2019, 5:12 pm IST
This will be the first LNG terminal on the East Coast of India
File photo of an LNG carrier. (Photo: AFP)
 File photo of an LNG carrier. (Photo: AFP)

Vijayawada: The Andhra Pradesh government on Friday signed two pacts for setting up a floating LNG Terminal at Kakinada Deep Water Port in the state.

The first MoU is the terminal company agreement between APGDC (Andhra Pradesh Gas Distribution Corporation), GDF SUEZ and Shell. It supports the development/execution of the terminal, according to an official statement.


APGDC (a joint venture company between the Andhra Pradesh government and GAIL), GDF SUEZ and Shell would have 48 per cent, 26 per cent and 26 per cent equity, respectively, in the project, it said.

The second MoU is the trading company agreement between GAIL, GDF SUEZ and Shell and covers both the sourcing of LNG and the marketing of the regasified LNG from the terminal. GAIL, GDF SUEZ and Shell would have 48 per cent, 26 per cent and 26 per cent equity, respectively, in the project.

The MoUs were signed in the presence of Andhra Pradesh Chief Minister N Chandrababu Naidu and GAIL CMD B C Tripathi, GDF SUEZ CEO Philip Olivier, Shell India's Anindya Chowdhury and other executives from the companies.


The Floating storage and Regasification Unit (FSRU) would be constructed with a cost of Rs 1,800 crore initially, it added. The Kakinada LNG terminal would use the FSRU with a peak capacity of five million tonnes per annum (mtpa) with the provision to double the capacity.

The terminal would use high-end technology and be one of the first of its kind of PPP projects in India, it said. The Kakinada port was found suitable for a project of this nature, owing to its availability of a natural breakwater in the Hope Island a barrier that protects against the impact of high seas.


Naidu said, "I'm fully committed to the project and am sure that these domestic and international partners who have come together, will bring the best expertise, technology and speediness from all over the world to complete the project within 18 months."

He described the LNG terminal as a great opportunity in the development of a project that shall ensure continuous availability of natural gas and support the government's gas grid, which is one of the five grids.

"FSRU-based LNG project is the fastest and most cost-effective way to secure energy supply while bolstering sustainable development and simultaneously cutting down on pollution," he said, adding that gas is the way to go as it dovetails world's concerns about climate change.


Considering the state and country's need for energy, Naidu said there are opportunities aplenty for scaling up.

"This will be the first LNG terminal on the East Coast of India. In my efforts to boost port-led development, I realise that this project will help us in making the state a logistics hub," he added.

Tripathi said the state gas utility has been anchoring the project and expressed confidence in meeting the deadline of 18 months.

"As a booming economy, we will support the state and the country in pushing this project and put in our best efforts."


Secretary (Infrastructure, Energy and Investments) Ajay Jain said this is a step in making Andhra Pradesh a gas hub.

"There are massive reserves of gas in the KG-D6 and we need to realise that this will be the only LNG terminal on the East Coast.

"So, if this project is successful and is completed within 18 months, it will be the best example of PPP projects in the country," he said.

Location: Andhra Pradesh