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

India is preparing a roadmap for establishing floating liquefied natural gas (LNG) storage facilities in all its major ports, a senior government official familiar with the matter said.

“A plan is in the works… It should be ready by the end of the fiscal year,” the official told ET. The project is estimated to cost a total of ₹20,000 crore and is 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 refueling facilities for ships, and will also help meet India’s increasing demand for gas from industry and for town gas distribution.


Green fuel for ships

“LNG will soon become the fuel of choice for ship power. The planned cryogenic storage facilities will receive and store natural gas in liquid form and then refuel ships coming to ports,” the official said.

Less polluting than marine oil, LNG is increasingly seen as the transitional fuel for ship power as industry worldwide moves towards green shipping. In April 2018, the International Maritime Organization (IMO) adopted an initial strategy for reducing greenhouse gas emissions from ships, with a vision of phasing it out “as soon as possible in this century” by moving to fully electric ships .

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The government’s decision to set up LNG storage facilities is also in line with India’s increasing domestic demand for natural gas. Indian Railways has recently allowed the transportation of LNG on their network to enable reliable deliveries to consumers in hinterland regions.

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According to the Petroleum Planning and Analysis Cell, about half of India’s total natural gas consumption is covered by imported LNG. The fertilizer sector, the main consumer of gas, meets approximately 70% of its needs through imports.

“The decision to establish LNG storage infrastructure will lower the end price for gas consumers and help replace fuels (gasoline, diesel, petroleum coke, fuel oil) that are refined from crude oil,” said Sumit Pokharna, an analyst at Kotak Securities. “It will also reduce the center’s subsidy burden while supporting the proliferation of city gas distribution hubs.”

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