East to gain from gas swap

A deal to swap LNG from the US for LNG from Japan will ensure the gas will land in the east coast and enable the revival of the fertiliser plants at Sindri, Gorakhpur and Barauni, which will use the gas as fuel.

By Jayanta Roy Chowdhury
  • Published 19.10.17
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New Delhi: A deal to swap LNG from the US for LNG from Japan will ensure the gas will land in the east coast and enable the revival of the fertiliser plants at Sindri, Gorakhpur and Barauni, which will use the gas as fuel.

Officials said the deal signed by the governments of India and Japan on Wednesday will help state-run GAIL India Ltd to swap about 60 per cent of its 5.8 million tonnes of LNG booked from the US with LNG contracted in Asia and elsewhere by Japan.

"A large chunk of the LNG brought back home through a complex three-part deal will ensure lower prices will be used for supplies to the three fertiliser units in eastern India," said the officials.

LNG will be supplied using an LNG terminal at Dhamra port which has been leased from the Adanis. GAIL is building a chain of pipelines to link the three previously defunct fertiliser plants - Sindri, Gorakhpur and Barauni with the terminal for the gas supply.

The government is also working through Hindustan Urvarak & Rasayan Ltd, a joint venture set up by a consortium of state run firms including Coal India Ltd, NTPC and Indian Oil Corporation, to revive a 1.27-million-tonne (mt) urea plant at Sindri. Set up in 1951, Sindri was India's first ammonium sulphate fertiliser plant. However, it was declared sick in 1992 and the Board for Industrial and Financial Reconstruction recommended its closure in 2001.

It is similarly working to revive gas-based fertiliser plants in the other two eastern Indian towns.

The Cabinet Committee on Economic Affairs had also earlier approved gas pooling for the urea sector, which will enable these units to get gas at pooled price on its revival that will make the urea units globally competitive.

Together these fertiliser plants will be able to produce a combined 3.9 million tons of the nitrogen fertiliser annually by 2020-2021 using natural gas. In all, GAIL will have to pump 7.5 million cubic meters of gas daily to feed these plants.

Officials said there were plans to open shut fertiliser plants at Talcher in Odisha and Ramagundam in Telangana.