Taking a step further in strengthening Andhra Pradesh in the energy sector, the Government of Andhra Pradesh today signed 2 MoUs for setting up a floating LNG Terminal at Kakinada Deep Water Port in Andhra Pradesh.
The first MOU is the Terminal Company Agreement between APGDC, GDF SUEZ and Shell. It supports the development/execution of the terminal. APGDC (a JV company between the Government of AP and GAIL), GDF SUEZ and Shell will have 48%, 26% and 26% equity in the project respectively.
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 will have 48%, 26% and 26% equity in the project respectively.
The MoU signing took place in presence of the Chief Minister Chandrababu Naidu and CMD of GAIL B.C. Tripathi, CEO of GDF Suez Philip Olivier, Anindya Chowdhury of Shell India and other executives from the companies.
The Floating storage and Regasification Unit (FSRU) will be constructed with a cost of Rs.1,800 crore initially.
The Kakinada LNG terminal will use the Floating Storage and Regasification Unit (FSRU) with a peak capacity of 5 million tonnes per annum (mtpa) with the provision to double the capacity.
The terminal will use high-end technology and will be one of the first of its kind of PPP projects in India. The Kakinada port was found suitable for a project of this nature, owing to its availability of a natural break-water in the Hope Island – a barrier that protects against the impact of high seas.
Speaking on the occasion, Chief Minister Chandrababu 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, the Chief Minister added that 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 realize that this project will help us in making the state a logistics hub,” he added.
BC Tripathi, CMD of GAIL, informed the audience that 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 that 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 realize 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, adding that this will also give a fillip to gas-based industries in the state.
Given that there is likely to be a shortage of gas of 15mmscmd and this might further drop to 40 mmscmd, the Chief Minister said: “This LNG Terminal would prove to be an important infrastructure for import of LNG on the eastern coast. Natural Gas is emerging as a significant fuel for economic development of the country and this FSRU-based LNG Terminal will surely play a far reaching role in making natural gas available to various consumers in industrial, commercial and domestic sectors.”
Chinarajappa, Kamineni Srinivas and others were present at the ceremony.