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AP government signed 2 pacts for setting up LNG terminal

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The Andhra Pradesh government signed two pacts for setting up a floating LNG Terminal at Kakinada Deep Water Port in the state. The terminal would use high-end technology and be one of the first of its kind of PPP projects and also the first LNG terminal on the East Coast of India.

About the MoUs:

  • 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 first MoU is the terminal company agreement between APGDC (Andhra Pradesh Gas Distribution Corporation) – a joint venture company between the Andhra Pradesh government and GAIL, GDF SUEZ and Shell which will support the development and execution of the terminal. In terms of shareholding APGDC, GDF SUEZ and Shell would have 48 per cent, 26 per cent and 26 per cent equity 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. In this project GAIL, GDF SUEZ and Shell would have 48 per cent, 26 per cent and 26 per cent equity respectively.
  • The Floating storage and Regasification Unit (FSRU) would be constructed with a cost of Rs 1,800 crore 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.

Significance:

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. The LNG terminal there can be seen 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.