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Shell bets big on India with its second LNG terminal

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Screen Shot 2015-09-25 at 08.10.20Shell expects LNG demand to rise by 5% every year over the next couple of decades while global gas demand is growing at 2%

By: Siddhartha P Saikia | Singapore | September 25, 2015 5:39 AM

Royal Dutch Shell, which set up a 5 million tonne LNG terminal at Hazira in Gujarat nearly a decade back, is targeting to grab a bigger share of the growing demand for imported gas in India. The Hague-based global energy giant is planning to set up a floating LNG facility on the east coast — at Kakinada in Andhra Pradesh.

Recently, Andhra Pradesh Gas Distribution Corporation (APGDC), GDF Suez, Shell and GAIL have signed a memorandum of understanding (MoU) to set up a floating LNG terminal with an initial capacity of 5 mt, which could be doubled at a later stage. “We have been very constructively working on the project (LNG terminal) on the east coast. We really believe in the India gas market,” said Maaten Wetselaar, executive vice present for Shell Integrated Gas in Singapore.

Although the company did not reveal the cost of the project, a 5 MT LNG terminal is expected to cost around $1 billion. India is the world’s fourth-largest LNG importer in, following Japan, South Korea and China, and consumed almost 6% of the global market. “I see a big future for gas in India. We are keen to open the east coast. We are working with the partners,” Wetselaar told FE. Currently, India gas consumption hovers around 100-110 million metric standard cubic metre per day (mmscmd). Of this, about 30-35% is sourced through R-LNG.

Shell believes that floating LNG terminal will the next big thing. The global energy giant has been working on this technology since 1990s.

A floating LNG terminal reduces the cost of the project, as there is no need for long pipelines to onshore terminal, compression platforms to push gas to the shore, near shore works such as dredging and jetty construction, and onshore development such as building roads, lay-down areas and accommodation facilities.

When asked about the impact of fall in crude oil prices to six-year low and expansion, Wetselaar said that Shell has a strong balance sheet and are ‘more critical’ of what and where it is investing.

The executive believes that his company has a ‘good foresight.’

Shell expects LNG demand to rise by 5% every year over the next couple of decades, while global gas demand is growing at 2% per year till 2030. By that time, the LNG market is expected to hit 460 mtpa, against 240 mtpa in 2014.  This is expected to be driven by the growing demands from China, Middle East and Europe – but also by new markets such as India, Malaysia, Philippines, Singapore, Thialand and Vietnam.

(Travel for this report was sponsored by Shell)

First Published on September 25, 2015 3:17 am

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