GAIL jilts Bengal, goes to Dhamra for floating unit

GAIL India Ltd has decided to shift its planned floating storage regasification unit (FSRU) for the east coast to Dhamra in Orissa from West Bengal due to lack of suitable location.

FSRU, an emerging technology which regasifies liquified natural gas in a floating vessel in a more cost effective manner than a shore-based gasification terminal, was being planned in West Bengal. A proposal was discussed recently between GAIL chairman and managing director BC Tripathy and state chief minister Mamata Banerjee and sites like Haldia and Digha, both in East Midnapore district, were considered.

Both the sites have now been found to be unsuitable and an alternate site, Dhamra in Orissa, where Tata Steel and Larsen & Tubro has set up a port, is now being pursued actively, S K Saha, zonal head of GAIL told reporters on the sidelines of a conference at the CII-sponsored BizBridge industry exhibition.

“Haldia was considered initially as a site for FRSU but was rejected due to low depth. We had also considered Digha but it has been found to be highly cyclone prone, not  suitable for cryogenic vessels,” said Saha.

“Recently, we have started considering Dhamra port which could be the right choice,” he said.

GAIL would be investing Rs3,000 crore in the FSRU, which would take about two years to build.

“It is less capital intensive and time consuming, which can be built within two years’ time against an onshore facility which needs at least 36-40 months,” he said.

The cost is slightly higher than Swan Energy’s capex of Rs2,500 crore for a 4.5 million metric tonne FSRU at Pipavav in Gujarat.
The floating gasification will help get natural gas supply to the eastern part of the country, which is being affected by the delay in building the pipeline from Jagdishpur in Uttar Pradesh to Haldia.

GAIL on November 17 will sign a memorandum of understanding for setting up a city gas supply joint venture with the West Bengal government, HPCL and Greater Calcutta Gas Supply Corp Ltd, a state government-owned utility, the official said.

“Hopefully from 2-3 years from today, cities of Kolkata and Howrah will get piped natural gas,” Saha said.

The investment estimated for the project is Rs2000 crore and the equity would be held in the ratio of 37% each by GAIL and HPCL and the balance 36% by the West Bengal government.

“We are hopeful of creating infrastructure for the city gas by bringing in coal bed methane gas, which is being produced in the east. Essar Oil, Great Eastern Energy and ONGC have started production.”