Local reports have described how Reliance Power has cancelled its liquefied natural gas (LNG) project with Shell. The LNG project at the Kakinada Deepwater Port in Andhra Pradesh, India, had begun as a joint venture between the two companies, but whereas Reliance Power pulled out due to the economic downturn in India, Shell remains unfazed. Roger Bounds, Shell Global LNG Upstream International vice president, said: “the best way forward to ensure a speedy implementation of the project was for Shell to take full control.”
“The project is currently a 100% Shell project”. It is likely that the LNG project will start with a capacity up to 5 million tpy and extend to a further 10 million tpy in order to meet the increasing demand for gas in the area”.
Brown continued: “Nearly 80% of Andhra Pradesh’s gas demand today remains unmet. This shortage of gas and the rapid growth of LNG imports, which is nearly 33% of overall gas supply, indicates that the gas demand cannot be met by domestic sources alone. Shell therefore, based on its experience in Gujarat, believes that setting up an LNG terminal in Andhra Pradesh will help in meeting this large demand of gas in the state.”
According to the Economic Times, an increase in LNG costs has rendered imported fuel an unviable option for Reliance Power. However, a reduction in LNG prices in the future would see the company resume interest.
Edited from various sources by Ted Monroe
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