New Delhi: Royal Dutch Shell and Reliance Power Thursday announced plans to set up a floating liquefied natural gas (LNG) import terminal off the coast of Kakinada in Andhra Pradesh by 2014.

The port announced by the two companies in separate but identical press statement is the same as the one for which state-owned gas utility GAIL India had roped in French utility GDF Suez and signed pact with Andhra Pradesh government for a 3.5 million tons floating LNG receipt facility.

"After the success of Shell's Hazira terminal in Gujarat, Shell is keen to set up an LNG receiving terminal in Andhra Pradesh," Royal Dutch Shell's Global Head of LNG De la Rey Venter said in the first official announcement of Reliance Power (RPL) and Shell joining hands for the floating terminal.

"We are pleased to have reached an agreement with RPL and Kakinada Sea Ports Ltd (KSPL) to implement the LNG terminal in AP and look forward to successfully progressing this project with our partners," he said.

While Shell operates a 3.6 million tons a year capacity LNG terminal at Hazira in Gujarat, the project off the Andhra coast "is expected to start with a capacity of up to 5 million tons per annum and is designed for easy expandability to 10 million tons to meet the surging demand for gas in the region."

Shell and billionaire Anil Ambani-run RPL will hold the majority of the equity in the terminal company, the statements said but did not give details of the equity structure. Kakinada Seaports operates the Kakinada deepwater port.

"This project uniquely benefits from Shell?s presence in several existing and planned LNG supply projects around the world which will help ensure diversity and security of supply," it said.

Kakinada is also the landfall point of billionaire Mukesh Ambani-led Reliance Industries' flagging KG-D6 gas fields in the Bay of Bengal, and a near 1,400-km line carries the fuel from there carries the fuel to consumption centres in the west.

The continuing fall in KG-D6 output has triggered a rush for setting up of LNG import facilities to meet the growing energy demands in the country.

While GAIL is doing a detailed feasibility report for the floating import facility, Petronet LNG Ltd - the nation's largest importer of gas in its liquid form (LNG) in ships, too is building a 5 million tons facility at Gangavaram in Andhra Pradesh by 2016.

In intervening period to the construction of the Rs 4,000 crore Gangavaram terminal, Petronet plans to hire a floating LNG terminal to begin imports of fuel immediately.

State refiner Indian Oil Corp (IOC) too is doing a front-end engineering and design (FEED) study for a terminal at Ennore in Tamil Nadu.


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