LNG storage planned at major ports at Rs 20,000 crore investment

India is preparing a roadmap for setting up floating storage facilities for liquefied natural gas (LNG) at all its major ports, a senior government official aware of the matter said.

“A plan is in the works … It would be finalised by the fiscal year-end,” the official told ET. The project is estimated to cost ?20,000 crore in total and will be open for private sector participation, the official said.

India has 12 major ports, of which Cochin (Kerala) and Kandla (Gujarat) already have accessible LNG storage facilities. The proposed LNG terminals will provide refuelling facilities for ships, as well as help serve India’s increasing demand for the gas from the industry and for city-gas distribution.

Green Fuel for Ships

“LNG is soon going to be the preferred fuel for powering ships. The cryogenic storages being planned will receive and store natural gas in the liquid form and then refuel ships that come to the ports,” the official said.

LNG, which is less polluting than marine oils, is increasingly being looked at as the transition fuel to power ships amid the industry’s direction globally towards green shipping. In April 2018, the International Maritime Organization (IMO) adopted an initial strategy on the reduction of greenhouse gas emissions from ships, with a vision to phase them out “as soon as possible in this century” by shifting to fully electric ships.

Local Supply

The government’s move to set up LNG storage facilities is also in line with India’s increasing domestic natural gas requirement. The Indian Railways recently allowed the

the LNG on its network to enable reliable supplies to consumers in hinterland regions.

According to the Petroleum Planning and Analysis Cell, roughly half of India’s total natural gas consumption is met with imported LNG. The fertiliser sector, chief consumer of gas, meets around 70% of its requirement through imports.

“The decision to set up LNG storage infrastructure will lower the end price for gas consumers and help replace fuels (petrol, diesel, petroleum coke, fuel oil) that are refined from crude oil,” said Sumit Pokharna, analyst, Kotak Securities. “It will also lower the subsidy burden of the Centre while supporting proliferation of city-gas distribution hubs.”