IndianOil joins TN to revive Ennore LNG project
Business Line, New Delhi, May 04, 2010

Public sector IndianOil and the Tamil Nadu Industrial Development Corporation Ltd (TIDCO) are to jointly set up an Rs 10,000-crore LNG (Liquefied Natural Gas) terminal and power plant near Chennai.

The Tamil Nadu Deputy Chief Minister, Mr M.K. Stalin, announced in the Assembly today that TIDCO will enter into a joint venture with IOC to set up a 5 million tonne LNG terminal close to the Ennore Port, to the north of Chennai. This facility will supply about 20 million cubic feet of natural gas daily to industrial consumers.

A gas-based power plant will also come up along with the LNG terminal, he said. TIDCO will take steps to implement the Rs 10,000-crore project.

The decision follows the growing need for natural gas as a fuel for power plants and industries. It is estimated that by 2015 the demand for natural gas in Tamil Nadu will be about 48 million cubic metres. At present, the availability is a minimal 4.2 million cubic metres, he said.

Distribution network

Through another joint venture, TIDCO and Gas Authority of India Ltd (GAIL) will set up a statewide distribution network to supply natural gas. GAIL is setting up an Rs 3,000-crore, 800-km Kochi-Bangalore gas pipeline, which passes through the districts of Coimbatore, Erode, Salem, Dharmapuri and Krishnagiri. Natural gas will be available to the consumers from the Kochi LNG terminal from 2012, he said.

In June 2008, TIDCO entered into a gas cooperation agreement with GAIL for a preliminary techno-economic feasibility study to assess demand potential, pipeline infrastructure and related facilities that would be needed in Tamil Nadu.

The announcement of the Ennore LNG terminal project marks the revival of a more than a decade-long attempt to implement the project. However, LNG availability had then been an issue that impacted progress of the project.

In 2000, Dakshin Bharat Energy, a consortium led by the CMS Energy and the Aditya Birla Group's Grasim Industries, bagged the international competitive bid floated by TIDCO. The other members in the consortium included Unocal Corp, US; Woodside Petroleum Ltd, Australia; and Siemens Project Ventures GmbH, Germany. Dakshin Bharat was to set up a 2.5 million tonne per year LNG terminal and a 1,886 MW power project at Ennore. But the project did not progress.

In 2003, IOC announced plans to set up the project with LNG sourced from Iran through an international bidding process.

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