ONGC signs MoU for Mangalore LNG terminal

State-owned Oil & Natural Gas Corp (ONGC) and its partners Mitsui of Japan and BPCL have signed an agreement to conduct feasibility of setting up USD 500-750 million liquid gas (LNG) import terminal at Mangalore.
    
ONGC, Bharat Petroleum Corp Ltd (BPCL) and Mitsui signed the Memorandum of Understanding (MoU) with New Mangalore Port Trust yesterday. ONGC issued a statement informing of the MoU today.
    
The terminal will have an initial capacity of 2-3 million tons, which can be expanded to 5 million tons later.
    
"The MoU documents the Port's No-Objection to carry out the feasibility studies and intention to extend all cooperation to the consortium in this regard," the statement said.

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The MoU was executed in presence of Karnataka Chief Minister Jagadish Shettar and Union Petroleum Minister M Veerappa Moily.
    
Post this MoU, feasibility studies on the project will be carried out, including technical, marine and environment dimensions. "The studies would throw up concrete action plans; an investment decision is expected by early 2014. The
consortium is eyeing a timeline of 2018 for commissioning," it said.
    
Mangalore has a unique position vis-à-vis the future demand and supply matrix of LNG. From the demand side, Mangalore is a fast-growing industrial hub with presence of Mangalore Refinery & Petrochemicals Ltd (MRPL), petrochemical complex ONGC Mangalore Petrochemicals Ltd (OMPL) and Special Economic Zone Mangalore SEZ (MSEZ).
    
Additionally, Mangalore hosts an iron ore industry, fertiliser plants and their ancillary industrial units. Currently, these industries are using heavy liquid sources like fuel oil and naphtha for their energy and feedstock needs.
    
Considering the growing demand of energy coupled with increasing focus on environment, there is a strong case for environment-friendly LNG replacing these polluting fuels, it said.
    
"The Mangalore region rides on a virgin LNG demand of 2-2.5 million tons per annum," the statement said.
    
The first phase of the terminal will cost USD 500-750 million (Rs 2,800 to 4,200 crore) and is expected to be completed in 3-4 years.
    
In 2005, ONGC had plans to build a liquefied natural gas (LNG) terminal, which were then shelved in 2006 due to change in leadership. But now the company has again started looking actively at the plan of LNG import, with the clear idea that domestic gas availability at 160 million standard cubic metres per day in 2015-16 will be way short of demand of 290 mmscmd.