India GSPC plans 5 mln T/yr LNG terminal

India's Gujarat State Petroleum Corp Ltd (GSPC) plans to build a five million tonne a year liquefied natural gas (LNG) terminal at the Mundra port in western India by 2013, a top company official said on Wednesday.
"To begin with it will have a capacity of five million tonnes, and will go up to 20 million tonnes," Managing Director D.J. Pandian told Reuters in a telephone interview from Gujarat.
India, Asia's third-largest oil consumer, is encouraging use of natural gas to control its oil import bill and rein in inflation but there is not enough supply to satisfy rising demand.
State-owned GSPC has hired an international consultant to prepare detailed feasibility report of the project, Pandian said.
"The report will be ready in four to six months from now, then only we can work out the costing and finalise the capacity," he said.
GSPC would hold a 50 percent stake in the project while India's Adani group has agreed to buy 25 percent, he said.
"We are talking to Essar for remaining stake. HPCL has also approached us for buying 25 percent. Let's see, if Essar, HPCL don't join us then we will go for IPO," Pandian said.
HPCL (HPCL.BO: Quote, Profile, Research) is a state-run refining and retailing firm.
Gas demand in India, currently around 179 million standard cubic metres a day (mmscmd), is far short of the supply of about 95 mmscmd. Supply is expected to double by 2009 after new gas fields, including those of Reliance Industries (RELI.BO: Quote, Profile, Research), start production.
India's Petronet LNG (PLNG.BO: Quote, Profile, Research) plans to double its capacity to 10 million tonnes of LNG, while Britain's BG Group Plc (BG.L: Quote, Profile, Research) plans to import LNG in India this year, adding to domestic supplies, but Pandian said the demand was rising.
Analysts say there is enormous potential for using compressed natural gas in vehicles once availability increases, while power and fertiliser units would also switch to natural gas.
Goldman Sachs estimates the share of natural gas in India's coal-dominated energy basket will double to 18 percent by 2015 and stabilise at 20 percent by 2025.
He said the LNG was not easily available currently, but by the time the firm's terminal is set up, enough gas would be there in the market.
A GSPC group firm Gujarat State Petronet Ltd (GSPT.BO: Quote, Profile, Research) is laying a pipeline network of 2,500 kilometres in the state, which can be used by GSPC to transport the re-gassified LNG to the demand centres. (Editing by Ranjit Gangadharan)