Petronet Not to Invest in Liquefaction Projects
India’s Petronet LNG has no plans to invest in LNG liquefaction projects as the global market is awash with LNG, the company said on November 12 during an analyst conference. It further stated that there has been no progress on finalising a preliminary deal it signed last year to invest $2.5bn in US developer Tellurian's Driftwood LNG project in Louisiana.
Petronet said that return on investment at liquefaction projects was not very attractive, given the glut in global LNG supply. This indicates that the company's memorandum of understanding (MoU) with Tellurian will not result in any concrete deal. Under the MoU, signed in September 2019, Petronet was to take a 18% stake in Driftwood and purchase 5mn metric tons/year of its output.
As for its proposed floating LNG import terminal in Sri Lanka, Petronet said final approvals were pending and no development work was expected before March next year. Petronet and its Japanese partners plan to invest $300mn in the project.
The Sri Lanka government will have a 15% stake in the proposed joint venture through Sri Lanka Gas Terminal, while Petronet LNG will have 47.5% and Sojitz Corp and Mitsubishi, the remaining 37.5%.
Petronet said it also wanted to build a new LNG import terminal on India’s east coast and also expand the capacity of its 17.5mn mt/yr Dahej terminal on the west coast.
Furthermore, the company is in the final stage of evaluating bids for turnkey contracts for designing, building and commissioning LNG filling stations in India, it said, having opened a tender in March. Petronet has already signed an MoU with Gujarat Gas to establish five stations in the state of Gujarat.
The company expects long-haul transport to consume 1mn mt/yr of LNG over the next three years, ramping up to 8-9mn mt/yr within a decade. Earlier this year, the Indian downstream regulator Petroleum Natural Gas Regulatory Board said that any entity could set up an LNG filling station in any geographical area, clearing up some regulatory issues.