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Shell, GDF Suez and Gail plan floating LNG terminal offshore India

16th January 2015

Andhra Pradesh Gas Distribution Corporation (APGDC), GDF Suez, Shell and Gail have signed two separate Memorandums of Understanding (MOUs) for a floating LNG terminal in Kakinada Deep Water Seaport in Kakinada, Andhra Pradesh

Andhra Pradesh Gas Distribution Corporation (APGDC), GDF Suez, Shell and Gail have signed two separate Memorandums of Understanding (MOUs) for a floating LNG terminal in Kakinada Deep Water Seaport in Kakinada, Andhra Pradesh
The second MOU is between Gail, GDF Suez and Shell and covers both the sourcing of LNG and the marketing of the regasified LNG from the terminal

The first MOU is between APGDC, GDF Suez and Shell and supports the development of the terminal. APGDC (a joint-venture company between the government of Andhra Pradesh and Gail), GDF Suez and Shell will have 48 per cent, 26 per cent and 26 per cent equity in the project respectively.

The second MOU is 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 per cent, 26 per cent and 26 per cent equity in the project respectively.

The Kakinada LNG terminal will use a state-of-the-art floating storage and regasification unit (FSRU) with a peak capacity of 5 million tonnes per annum (mtpa) with the provision to double the capacity.

“This is first of its kind LNG terminal in India and would prove to be an important infrastructure for import of LNG on the eastern coast,” said B. C. Tripathi, chairman and managing director of Gail (India) Limited. “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.”

The proposed terminal will use high-end technology and will be one of the first of its kind 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.

Chief minister of Andhra Pradesh Shri N Chandrababu Naidu, who was witness to the MOU signing, said: “I am fully committed to the project and am sure that these domestic and international partners who have come together under this MOU will bring the best expertise, technology and speediness from all over the world to complete the project within 18 months.”

About the Kakinada LNG terminal, he described it as a great opportunity in the development of a project that shall ensure continuous availability of natural gas.

In many countries FSRU based LNG project is the fastest and most cost-effective way to secure energy supply while bolstering the fight against climate change and air pollution. He pointed out that gas is the way to go as it dovetails concerns about climate change. Considering the state and country’s need for energy, Shri Naidu stated that opportunities for scaling up are huge. The chief minister also suggested that building such partnerships is important to develop projects with advanced technological capabilities.

Speaking about the project, Dr. Yasmine Hilton, chairman, Shell Companies in India, said: “Shell is pleased to contribute to this opportunity with our partners as a LNG terminal in Andhra Pradesh will help meet the energy demand in the region. Natural gas is uniquely positioned to help meet energy and environmental challenges and we are encouraged by the State’s commitment to the project. We are grateful to the chief minister for taking this initiative forward.”  

Lucas Hautvast, CEO and president of GDF Suez Energy South Asia, Middle East and Africa, said: “GDF Suez, as one of the key stakeholders and strategic investors in Petronet LNG – the owner of India’s first LNG terminal – has a long history in the country. Soon after its acquisition of a majority stake in the 1,000 MW Meenakshi coal-fired power project near Krishnapatnam port, the participation in the Kakinada LNG project confirms GDF SUEZ’s confidence in the Indian energy growth potential. We are excited to be part of the energy infrastructure development story that is taking shape in Andhra Pradesh and are proud to bring our experience in floating LNG to India for this first East coast terminal. We look forward to working with such prestigious partners as APGDC, GAIL and Shell to bring this project to fruition.”

Both MOUs were signed in the presence of Shri Nara Chandrababu Naidu, chief minister of Andhra Pradesh, Shri P Ashok Gajapathi Raju, union minister of civil aviation, Shri Dharmendra Pradhan, union minister of state (independent charge) for petroleum and natural gas, and Shri Y. S. Chowdary, union minister of state for science and technology and earth sciences.

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