Dhamra LNG facility has Indian Oil Corporation and GAIL (India) as long-term customers who have converted their consumption centres to be gas ready in sync with the readiness of the terminal.
Liquefied natural gas (LNG) carrier ‘Milaha Ras Laffan’ carrying the super chilled fuel docked at the Dhamra port in Orissa run by Adani Ports and Special Economic Zone Ltd (APSEZ), on 1 April, marking the start of a 5 million tons per annum (mtpa) capacity LNG import terminal – the second on the country’s eastern coast – built to bridge a critical gap in India’s gas infrastructure.
The LNG terminal is a wholly owned unit of Adani Total Pvt Ltd, an equal joint venture between the Adani Group and the global multi-energy company TotalEnergies, the world’s third largest LNG firm.
The arrival of the first LNG cargo sets the stage for the commissioning of the terminal, with a few processes to be completed in the coming weeks.
The terminal will be able to berth the widest range of LNG vessels all year around, transport LNG/ gas via pipelines, trucks or on reloaded vessels. It has two full containment tanks, each of 180,000 m 3 capacity which are amongst the largest in the country. The terminal uses ambient air for regassifying LNG, widely regarded as the most environmentally friendly option.
The terminal took four years to construct, overcoming several challenges including the pandemic, cyclones, difficult soil conditions, supply chain disruptions and the highly volatile LNG market due to the conflict in Europe.
Dhamra LNG has Indian Oil Corporation and GAIL (India) as long-term customers who have converted their consumption centres to be gas ready in sync with the readiness of the terminal.
State-run natural gas firm GAIL India has booked 1.5 mtpa regasification capacity for 20 years on a use or pay basis. GAIL plans to supply the gas to its customers located in the eastern region and along the under development Jagdishpur– Haldia gas grid.
Indian Oil Corporation has booked 3 mtpa regasification capacity for 20 years on a use or pay basis, helping the State-run oil refiner supply gas to its refineries in Paradip and Haldia.
The Dhamra regasification terminal will be the main supply point on the recently completed Urja Ganga pipeline developed by GAIL, providing gas access to over 35 percent of India’s population, covering about 20 percent of the country’s land mass, a company official said.
Dhamra LNG terminal has design flexibility to be expanded to 10 mtpa in phase 2, with the provision of an additional storage tank, vaporisation, and ancillary facilities.
Refineries, fertiliser plants, industries, and city gas distribution (CGD) networks in the hinterland, comprising the eastern and north-eastern states, will be the consumers of gas from the Dhamra LNG facility.
The long-term price of LNG trades at a discount of more than $5 per mmbtu compared to alternative liquid fuels like Naphtha, Fuel Oil and Diesel. The current annual consumption of substitutable liquid fuels across refineries, fertiliser plants and industries in the eastern region is about 5 mtpa. Based on this, substituting 5 mtpa equivalent liquid fuels with LNG would translate into a saving of some Rs10,000 crores per annum for the Indian economy.
The east and north-east has seven refineries that could eventually switch to gas for fuel, power, and hydrogen production. Of these, Paradip and Barauni are gas ready and expected to consume 7 mmscmd (million metric standard cubic meters of gas per day) which will help them meet the twin objectives of becoming less carbon intensive and improving margins by including petchem in their product mix.
Besides, the Dhamra terminal will likely be able to supply LNG most competitively owing to the shorter pipeline distance when compared to other LNG terminals.
The journey of the Dhamra LNG terminal coincide with that of the Urja Ganga pipeline, which itself is connected to the National Gas Grid – the Hazira-Vijaipur-Jagdishpur (HVJ) pipeline – thereby providing customers in northern India with a ready alternative source of supply when compared to the western terminals on whom they are now solely dependent.
Its proximity to Bangladesh and other regional markets allows Dhamra to become a viable point of supply to customers there. The ongoing Srikakulam-Angul and Mumbay-Jharsuguda pipeline projects will soon connect Dhamra to central and southern states, thus completing the National Gas Grid integration.
From a regulatory perspective, the Dhamra facility will benefit from the recent publication of a levelized transportation tariff (and based on that, a zonal tariff) by the Petroleum and Natural Gas Regulatory Board (PNGRB), fostering the National Gas Grid integration while providing a level playing field to gas consumers across the country.
The National Gas Grid is an integrated gas transportation network of major pipeline operators in India. Earlier these pipeline operators were operating independently with individual zonal tariffs resulting in de-cascading of transportation tariffs.
With the change notified by PNGRB, customers away from coastal regions will benefit from a more competitive transport tariff, whilst existing customers in the northern regions will have gas access from a diversified (west and east) supply base.
Therefore, in addition to having a competitive advantage in supplying customers in the east and north-east, Dhamra can also supply customers in the north by charging the same transport tariff as Dahej or Hazira.
“As a large customer base in the east is already gas ready, the Dhamra terminal will likely see a healthy throughput from the outset,” the official said.
LNG is considered as a bridge fuel for India’s energy transition, essential to support its sustainability commitments. These commitments require that the carbon intensity of the economy should be reduced by 45 percent by 2030 over the 2005 level and achieve net zero by 2070.
Every unit of Naphtha that is substituted by LNG would reduce CO2 emissions by 30 percent, NOx by 3 times and SOx by 10 times – gas emits half as much as coal in the production of electricity and does not cause air pollution.
LNG is predominantly methane (C1) gas chilled to around minus 160 Degree Celsius where it turns into liquid at atmospheric pressure, occupying less than 1/600 th of the volume it otherwise would. This allows huge quantities of energy to be transported across oceans in specialised vessels in a safe and economic manner, reaching markets globally that otherwise would not have access to gas.
Natural Gas is regarded as the cleanest burning fuel with global reserves far more than crude oil. This abundance and environmentally friendly nature of gas has resulted in its rapid adoption as a fuel of choice over the past few decades. Where gas reserves are not available, it has been imported, increasingly in the form of LNG.
Last year, the global LNG trade reached around 400 million tons. Over the past three years, Indian imports have varied between 22 and 24 mtpa representing around 3 percent of the country’s primary energy basket.
India is a rapidly growing LNG market, with the fuel currently meeting roughly half of the country’s gas consumption. The country plans to increase the share of natural gas to 15 percent of its primary energy basket by 2030.
