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Home KSEB Petronet to provide 2.2MT/year LNG for expansion of Kayamkulam plant

Petronet to provide 2.2MT/year LNG for expansion of Kayamkulam plant

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KayamkulamPetronet LNG  has agreed to arrange 2.2 million tonnes of liquefied natural gas (LNG) per year that NTPC Ltd will use to fuel its southern India plant currently running on naphtha, officials said. State-run NTPC, the country's biggest power producer, is increasing capacity by 1950 MW at its 350 megawatt (MW) Kayamkulam power plant in the southern state of Kerala. "We are only going to sign the agreement by month end," Power Secretary H.S. Brahma told Reuters, but did not give further details.

Petronet's chief executive P. Dasgupta said that NTPC has sought annual supply of 2.2 million tonnes LNG for the plant. Other officials said the deal may take a little longer as the proposal needed to be approved by NTPC board.

"We will initially sign the contract for 1.2 million tonnes a year on a firm basis, but going forward Petronet has assured that they will arrange for the balance," said an NTPC official, speaking on condition of anonymity.

"If we we sign the gas deal today we can expand the capacity in about three years time, but we want to synchronise the expansion with gas supplies," he said.

He said NTPC would sign gas supply agreements with Indian Oil Corp , Bharat Petroleum Corp  and GAIL (India) Ltd . The three firms owns local marketing rights for the gas procured by Petronet.

Earlier this month Petronet's Dasgupta signed a deal with Exxon Mobil Corp to buy 1.5 million tonnes of LNG a year for 20 years from Australia's Gorgon project to be regassified at its upcoming Kochi terminal in south India.

The terminal with annual capacity of 2.5 million tonnes will be commissioned in 2012.

He said 1.2 million tonnes of the Gorgon supplies would be offered to NTPC and the remainder would be supplied to BPCL's Kochi refinery and a fertiliser plant in Kerala. The NTPC official said that between Petronet's southern terminal opening and the Gorgon gas supplies beginning in late 2014, Petronet would source the LNG through short-term purchases or contracts.

Source - Reuters

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