Paradip, Feb. 1: Gas Authority of India Limited (GAIL) has pulled out from its plans to set up a floating liquefied natural gas (LNG) import terminal at the port here.

This comes at a time when Indian Oil Corporation Limited has drawn up a project to have an LPG terminal to expand gas supply base to the rural areas of the state.

Indian Oil is setting up the terminal at Dhamra port in Bhadrak district with a capacity of five million tonnes at a cost of Rs 690 crore. In place of the LNG terminal, the company has plans to establish a liquefied petroleum gas (LPG) terminal at Paradip port.

"The establishment of the LPG terminal will make Paradip a gas hub of eastern as well as central India," said Union petroleum and natural gas minister Dharmendra Pradhan while briefing reporters here.

The Paradip Port Trust and GAIL, the country's largest natural gas distributor, had signed an MoU on October 26, 2013, to set up a five-million-tonne-per-annum-capacity LNG terminal at Paradip port.

"Indian Oil is working on the Paradip-Durgapur LPG pipeline to enhance supplies. Once the pipeline work is over, the terminal would come up at Paradip port. Keeping in view the rising demand of petroleum gas in the rural pockets of the state, Indian Oil has drawn up plans on infrastructure development and is improving logistics for the flow of gas," Pradhan said.

Earlier, GAIL pulling out from the proposed LNG terminal project had drawn sharp reaction from Opposition parties. They had levelled charges that the Union government was partial towards the economic interest of the private port at Dhamra and that was why the project got relocated.

"The company is laying more emphasis on protecting the commercial growth of Paradip port. It had signed an MoU with Dhamra port in 2012 while GAIL signed an MoU with the Paradip Port Trust a year later for the LNG terminal project. Since the company is installing the LNG terminal at Dhamra, its LPG terminal is being set up at Paradip," said a senior officer of the company's pipeline division.

"PPT is yet to receive proposals regarding setting up of the LPG terminal by Indian Oil. However, there is ample feasibility for the project since the company has its own jetty at Paradip. From its jetty base, the company could set up the LPG terminal," said port trust chairman Rinkesh Roy.