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IndianOil and GAIL sign MoU to take equity in Dhamra LNG terminal

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LNG Industry,

Indian Oil Corp. Ltd and GAIL (India) Ltd have signed a memorandum of understanding (MoU) with Dhamra LNG Terminal Private Ltd (DLTPL) for taking equity in the LNG receiving, storage and regasification terminal that is being developed at Dhamra Port, Odisha, India.

The 5 million tpy capacity terminal would be able to provide energy to potential customers in eastern Indian states, such as Odisha, Bihar, Jharkhand and West Bengal, which are currently unable to get the benefits of gas in the domestic, transport and industrial sectors.

As per the terms of the MoU, DLTPL shall be an equal joint venture (JV) of IndianOil and GAIL on the one hand, and Adani Group on the other. IndianOil would acquire 39% equity in DLTPL, whilst GAIL would acquire 11% equity. Adani Group would hold the remaining 50%. Going forward, Adani Group and IndianOil will each divest 1% of their stakes to a credible financial institution, which will then hold a 2% stake in the terminal. Apart from equity, IndianOil intends to book 3 million tpy capacity in the terminal, whilst GAIL intends to book capacity of 1.5 million tpy in the terminal.

The terminal would also help meet the gas requirements of three of IndianOil’s oil refineries located in Barauni, Haldia and Paradip, as well as three fertiliser plants in Barauni, Sindri and Gorakhpur, which are being revived by the Indian government. In addition to this, gas from the terminal would also be used by a number of city gas distribution networks coming up in eastern India, providing fuel for households.

In addition to the MoU, IndianOil has announced that the Cabinet Committee on Economic Affairs has approved a capital grant of 40%, amounting to RS5176 Crores over 5 years, for the Jagdishpur-Haldia and Bokaro-Dhamra Pipeline (JHBDPL) project, which is being developed by GAIL at a total capital outlay of RS12940 Crores.

It is expected that the 2539 km long pipeline will be completed by December 2020. It will connect UP, Bihar, Jharkhand, West Bengal and Odisha. Furthermore, the project will see GAIL develop city gas distribution networks in seven important towns in India: Varanasi, Patna, Ranchi, Jamshedpur, Kolkata, Bhubaneshwar and Cuttack. The pipeline project will supply gas to the Barauni, Sindri and Gorakhpur fertiliser plants in eastern India.

Combined, the terminal project and pipeline project are expected to bring approximately RS51 000 Crores into the eastern Indian economy. Approximately RS13 000 Crores of this will be used for JHBDPL pipeline infrastructure, whilst RS6000 Crores will be used for the city gas distribution projects in seven towns. A further RS6000 Crores will be used for the Dhamra LNG terminal, and RS26 000 Crores on the revival of the Gorakhpur, Barauni, Sindri and Talcher fertiliser units.

Edited from press release by David Rowlands

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